Correlation Between Tehmag Foods and Analog Integrations

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

By analyzing existing cross correlation between Tehmag Foods and Analog Integrations, you can compare the effects of market volatilities on Tehmag Foods and Analog Integrations 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 Tehmag Foods with a short position of Analog Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Analog Integrations.

Diversification Opportunities for Tehmag Foods and Analog Integrations

0.83

Correlation Coefficient

Tehmag Foods  Analog Integrations

Very poor diversification

The 3 months correlation between Tehmag and Analog is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Analog Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Integrations and Tehmag Foods 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 Tehmag Foods are associated (or correlated) with Analog Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Integrations has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Analog Integrations go up and down completely randomly.

Pair Corralation between Tehmag Foods and Analog Integrations

Assuming the 90 days trading horizon Tehmag Foods is expected to generate 1.18 times less return on investment than Analog Integrations. But when comparing it to its historical volatility, Tehmag Foods is 4.85 times less risky than Analog Integrations. It trades about 0.08 of its potential returns per unit of risk. Analog Integrations is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9,283  in Analog Integrations on September 14, 2024 and sell it today you would earn a total of  587.00  from holding Analog Integrations or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Tehmag Foods  vs.  Analog Integrations

Tehmag Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tehmag Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tehmag Foods is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Analog Integrations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Integrations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Tehmag Foods and Analog Integrations

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

The idea behind Tehmag Foods and Analog Integrations 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.