Correlation Between TONGDAO LIEPGR and STHREE PLC

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

By analyzing existing cross correlation between TONGDAO LIEPGR DL 0001 and STHREE PLC LS, you can compare the effects of market volatilities on TONGDAO LIEPGR and STHREE PLC 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 TONGDAO LIEPGR with a short position of STHREE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TONGDAO LIEPGR and STHREE PLC.

Diversification Opportunities for TONGDAO LIEPGR and STHREE PLC

0.05

Correlation Coefficient

TONGDAO LIEPGR  STHREE PLC

Significant diversification

The 3 months correlation between TONGDAO and STHREE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding TONGDAO LIEPGR DL 0001 and STHREE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STHREE PLC LS and TONGDAO LIEPGR 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 TONGDAO LIEPGR DL 0001 are associated (or correlated) with STHREE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STHREE PLC LS has no effect on the direction of TONGDAO LIEPGR i.e., TONGDAO LIEPGR and STHREE PLC go up and down completely randomly.

Pair Corralation between TONGDAO LIEPGR and STHREE PLC

Assuming the 90 days horizon TONGDAO LIEPGR DL 0001 is expected to generate 2.79 times more return on investment than STHREE PLC. However, TONGDAO LIEPGR is 2.79 times more volatile than STHREE PLC LS. It trades about 0.06 of its potential returns per unit of risk. STHREE PLC LS is currently generating about 0.02 per unit of risk. If you would invest  38.00  in TONGDAO LIEPGR DL 0001 on April 24, 2025 and sell it today you would earn a total of  5.00  from holding TONGDAO LIEPGR DL 0001 or generate 13.16% return on investment over 90 days.

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

TONGDAO LIEPGR DL 0001  vs.  STHREE PLC LS

TONGDAO LIEPGR DL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TONGDAO LIEPGR DL 0001 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TONGDAO LIEPGR reported solid returns over the last few months and may actually be approaching a breakup point.

STHREE PLC LS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STHREE PLC LS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STHREE PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TONGDAO LIEPGR and STHREE PLC

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

The idea behind TONGDAO LIEPGR DL 0001 and STHREE PLC LS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.