Correlation Between CHINA TONTINE and Seaboard

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

By analyzing existing cross correlation between CHINA TONTINE WINES and Seaboard, you can compare the effects of market volatilities on CHINA TONTINE and Seaboard 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 CHINA TONTINE with a short position of Seaboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and Seaboard.

Diversification Opportunities for CHINA TONTINE and Seaboard

0.0

Correlation Coefficient

CHINA TONTINE  Seaboard

Pay attention - limited upside

The 3 months correlation between CHINA and Seaboard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard and CHINA TONTINE 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 CHINA TONTINE WINES are associated (or correlated) with Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of CHINA TONTINE i.e., CHINA TONTINE and Seaboard go up and down completely randomly.

Pair Corralation between CHINA TONTINE and Seaboard

Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 30.03 times more return on investment than Seaboard. However, CHINA TONTINE is 30.03 times more volatile than Seaboard. It trades about 0.04 of its potential returns per unit of risk. Seaboard is currently generating about -0.05 per unit of risk. If you would invest  0.70  in CHINA TONTINE WINES on September 28, 2024 and sell it today you would earn a total of  6.30  from holding CHINA TONTINE WINES or generate 900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CHINA TONTINE WINES  vs.  Seaboard

CHINA TONTINE WINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA TONTINE WINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, CHINA TONTINE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Seaboard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seaboard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CHINA TONTINE and Seaboard

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

The idea behind CHINA TONTINE WINES and Seaboard 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 Transaction History module to view history of all your transactions and understand their impact on performance.