Correlation Between TCI and Fu Burg

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

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

Diversification Opportunities for TCI and Fu Burg

-0.77

Correlation Coefficient

TCI  Fu Burg

Pay attention - limited upside

The 3 months correlation between TCI and 8929 is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding TCI Co and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg Industrial and TCI 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 TCI Co are associated (or correlated) with Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of TCI i.e., TCI and Fu Burg go up and down completely randomly.

Pair Corralation between TCI and Fu Burg

Assuming the 90 days trading horizon TCI Co is expected to under-perform the Fu Burg. But the stock apears to be less risky and, when comparing its historical volatility, TCI Co is 3.16 times less risky than Fu Burg. The stock trades about -0.14 of its potential returns per unit of risk. The Fu Burg Industrial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,145  in Fu Burg Industrial on September 2, 2024 and sell it today you would earn a total of  1,250  from holding Fu Burg Industrial or generate 58.28% return on investment over 90 days.

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

TCI Co  vs.  Fu Burg Industrial

TCI Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TCI Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Fu Burg Industrial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fu Burg Industrial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fu Burg showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TCI and Fu Burg

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

The idea behind TCI Co and Fu Burg Industrial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.