Correlation Between Tamburi Investment and Baker Steel

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

By analyzing existing cross correlation between Tamburi Investment Partners and Baker Steel Resources, you can compare the effects of market volatilities on Tamburi Investment and Baker Steel 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 Tamburi Investment with a short position of Baker Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tamburi Investment and Baker Steel.

Diversification Opportunities for Tamburi Investment and Baker Steel

-0.74

Correlation Coefficient

Tamburi Investment  Baker Steel

Pay attention - limited upside

The 3 months correlation between Tamburi and Baker is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tamburi Investment Partners and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources and Tamburi Investment 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 Tamburi Investment Partners are associated (or correlated) with Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of Tamburi Investment i.e., Tamburi Investment and Baker Steel go up and down completely randomly.

Pair Corralation between Tamburi Investment and Baker Steel

Assuming the 90 days trading horizon Tamburi Investment Partners is expected to under-perform the Baker Steel. But the stock apears to be less risky and, when comparing its historical volatility, Tamburi Investment Partners is 2.13 times less risky than Baker Steel. The stock trades about -0.1 of its potential returns per unit of risk. The Baker Steel Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,780  in Baker Steel Resources on September 14, 2024 and sell it today you would earn a total of  1,020  from holding Baker Steel Resources or generate 21.34% return on investment over 90 days.

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

Tamburi Investment Partners  vs.  Baker Steel Resources

Tamburi Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tamburi Investment Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tamburi Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Baker Steel Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Steel Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Baker Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tamburi Investment and Baker Steel

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

The idea behind Tamburi Investment Partners and Baker Steel Resources 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.