Correlation Between System and TJ Media

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

By analyzing existing cross correlation between System and Application and TJ media Co, you can compare the effects of market volatilities on System and TJ Media 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 System with a short position of TJ Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and TJ Media.

Diversification Opportunities for System and TJ Media

0.47

Correlation Coefficient

System  TJ Media

Very weak diversification

The 3 months correlation between System and 032540 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and TJ media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJ media and System 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 System and Application are associated (or correlated) with TJ Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJ media has no effect on the direction of System i.e., System and TJ Media go up and down completely randomly.

Pair Corralation between System and TJ Media

Assuming the 90 days trading horizon System and Application is expected to generate 3.82 times more return on investment than TJ Media. However, System is 3.82 times more volatile than TJ media Co. It trades about 0.14 of its potential returns per unit of risk. TJ media Co is currently generating about 0.08 per unit of risk. If you would invest  138,300  in System and Application on September 20, 2024 and sell it today you would earn a total of  22,400  from holding System and Application or generate 16.2% return on investment over 90 days.

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

System and Application  vs.  TJ media Co

System and Application

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in System and Application are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, System may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TJ media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TJ media Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with System and TJ Media

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

The idea behind System and Application and TJ media 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.