Correlation Between Chow Tai and Tiffany

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

By analyzing existing cross correlation between Chow Tai Fook and Tiffany Co, you can compare the effects of market volatilities on Chow Tai and Tiffany 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 Chow Tai with a short position of Tiffany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chow Tai and Tiffany.

Diversification Opportunities for Chow Tai and Tiffany

0.0

Correlation Coefficient

Chow Tai  Tiffany

Pay attention - limited upside

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

Pair Corralation between Chow Tai and Tiffany

If you would invest (100.00) in Tiffany Co on January 19, 2024 and sell it today you would earn a total of  100.00  from holding Tiffany Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Chow Tai Fook  vs.  Tiffany Co

Chow Tai Fook

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chow Tai Fook are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chow Tai reported solid returns over the last few months and may actually be approaching a breakup point.

Tiffany

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiffany Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Tiffany is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chow Tai and Tiffany

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

The idea behind Chow Tai Fook and Tiffany Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.