Correlation Between Tienlen Steel and Construction JSC

Can any of the company-specific risk be diversified away by investing in both Tienlen Steel and Construction JSC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tienlen Steel and Construction JSC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tienlen Steel Corp and Construction JSC No5, you can compare the effects of market volatilities on Tienlen Steel and Construction JSC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tienlen Steel with a short position of Construction JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Construction JSC.

Diversification Opportunities for Tienlen Steel and Construction JSC

-0.67

Correlation Coefficient

Tienlen Steel  Construction JSC

Excellent diversification

The 3 months correlation between Tienlen and Construction is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Construction JSC No5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction JSC No5 and Tienlen Steel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tienlen Steel Corp are associated (or correlated) with Construction JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction JSC No5 has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Construction JSC go up and down completely randomly.

Pair Corralation between Tienlen Steel and Construction JSC

Assuming the 90 days trading horizon Tienlen Steel Corp is expected to under-perform the Construction JSC. But the stock apears to be less risky and, when comparing its historical volatility, Tienlen Steel Corp is 3.47 times less risky than Construction JSC. The stock trades about -0.17 of its potential returns per unit of risk. The Construction JSC No5 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,710,000  in Construction JSC No5 on September 15, 2024 and sell it today you would earn a total of  290,000  from holding Construction JSC No5 or generate 16.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	61.54%
Values	Daily Returns

Tienlen Steel Corp  vs.  Construction JSC No5

Tienlen Steel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tienlen Steel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Construction JSC No5

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Construction JSC No5 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction JSC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tienlen Steel and Construction JSC

The main advantage of trading using opposite Tienlen Steel and Construction JSC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel position performs unexpectedly, Construction JSC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Construction JSC will offset losses from the drop in Construction JSC's long position.

The idea behind Tienlen Steel Corp and Construction JSC No5 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.