Correlation Between Tianjin Capital and OFAL

Can any of the company-specific risk be diversified away by investing in both Tianjin Capital and OFAL 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 OFAL 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 OFAL, you can compare the effects of market volatilities on Tianjin Capital and OFAL 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 OFAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Capital and OFAL.

Diversification Opportunities for Tianjin Capital and OFAL

-0.53

Correlation Coefficient

Tianjin Capital  OFAL

Excellent diversification

The 3 months correlation between Tianjin and OFAL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and OFAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFAL 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 OFAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFAL has no effect on the direction of Tianjin Capital i.e., Tianjin Capital and OFAL go up and down completely randomly.

Pair Corralation between Tianjin Capital and OFAL

Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 0.48 times more return on investment than OFAL. However, Tianjin Capital Environmental is 2.07 times less risky than OFAL. It trades about 0.12 of its potential returns per unit of risk. OFAL is currently generating about -0.13 per unit of risk. If you would invest  38.00  in Tianjin Capital Environmental on September 11, 2025 and sell it today you would earn a total of  8.00  from holding Tianjin Capital Environmental or generate 21.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tianjin Capital Environmental  vs.  OFAL

Tianjin Capital Envi

Risk-Adjusted Performance

Fair

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 fragile forward indicators, Tianjin Capital reported solid returns over the last few months and may actually be approaching a breakup point.

OFAL

Risk-Adjusted Performance

Weakest

Over the last 90 days OFAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2026. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Tianjin Capital and OFAL

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

The idea behind Tianjin Capital Environmental and OFAL 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.