Correlation Between TS Investment and J Steel

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

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

Diversification Opportunities for TS Investment and J Steel

-0.56

Correlation Coefficient

TS Investment  J Steel

Excellent diversification

The 3 months correlation between 246690 and 023440 is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding TS Investment Corp and J Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Steel and TS 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 TS Investment Corp are associated (or correlated) with J Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Steel has no effect on the direction of TS Investment i.e., TS Investment and J Steel go up and down completely randomly.

Pair Corralation between TS Investment and J Steel

Assuming the 90 days trading horizon TS Investment Corp is expected to generate 1.17 times more return on investment than J Steel. However, TS Investment is 1.17 times more volatile than J Steel Co. It trades about 0.24 of its potential returns per unit of risk. J Steel Co is currently generating about 0.07 per unit of risk. If you would invest  86,900  in TS Investment Corp on September 17, 2024 and sell it today you would earn a total of  25,500  from holding TS Investment Corp or generate 29.34% return on investment over 90 days.

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

TS Investment Corp  vs.  J Steel Co

TS Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

J Steel

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in J Steel Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, J Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TS Investment and J Steel

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

The idea behind TS Investment Corp and J Steel 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..