Correlation Between Tianjin Capital and IAMGOLD

Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and IAMGOLD 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 Tianjin Capital and IAMGOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tianjin Capital Environmental and IAMGOLD P 575, you can compare the effects of market volatilities on Tianjin Capital and IAMGOLD 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 Tianjin Capital with a short position of IAMGOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and IAMGOLD.

Diversification Opportunities for Tianjin Capital and IAMGOLD

-0.23

Correlation Coefficient

Tianjin Capital  IAMGOLD

Very good diversification

The 3 months correlation between Tianjin and IAMGOLD is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and IAMGOLD P 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGOLD P 575 and Tianjin Capital 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 Tianjin Capital Environmental are associated (or correlated) with IAMGOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAMGOLD P 575 has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and IAMGOLD go up and down completely randomly.

Pair Corralation between Tianjin Capital and IAMGOLD

Assuming the 90 days horizon Tianjin Capital is expected to generate 3.39 times less return on investment than IAMGOLD. But when comparing it to its historical volatility, Tianjin Capital Environmental is 10.73 times less risky than IAMGOLD. It trades about 0.09 of its potential returns per unit of risk. IAMGOLD P 575 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,432  in IAMGOLD P 575 on September 29, 2024 and sell it today you would lose (1,720) from holding IAMGOLD P 575 or give up 18.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Tianjin Capital Environmental  vs.  IAMGOLD P 575

Tianjin Capital Envi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, Tianjin Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IAMGOLD P 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAMGOLD P 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for IAMGOLD P 575 investors.

Pair Trading with Tianjin Capital and IAMGOLD

The main advantage of trading using opposite Tianjin Capital and IAMGOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital position performs unexpectedly, IAMGOLD 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 IAMGOLD will offset losses from the drop in IAMGOLD's long position.

The idea behind Tianjin Capital Environmental and IAMGOLD P 575 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.