Correlation Between TES Co and Worldex Industry

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

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

Diversification Opportunities for TES Co and Worldex Industry

0.94

Correlation Coefficient

TES Co  Worldex Industry

Almost no diversification

The 3 months correlation between TES and Worldex is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding TES Co and Worldex Industry Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldex Industry Trading and TES Co 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 TES Co are associated (or correlated) with Worldex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldex Industry Trading has no effect on the direction of TES Co i.e., TES Co and Worldex Industry go up and down completely randomly.

Pair Corralation between TES Co and Worldex Industry

Assuming the 90 days trading horizon TES Co is expected to generate 1.45 times more return on investment than Worldex Industry. However, TES Co is 1.45 times more volatile than Worldex Industry Trading. It trades about 0.14 of its potential returns per unit of risk. Worldex Industry Trading is currently generating about -0.02 per unit of risk. If you would invest  1,469,000  in TES Co on September 20, 2024 and sell it today you would earn a total of  124,000  from holding TES Co or generate 8.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

TES Co  vs.  Worldex Industry Trading

TES Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TES Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TES Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Worldex Industry Trading

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TES Co and Worldex Industry

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

The idea behind TES Co and Worldex Industry Trading 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..