Correlation Between BRC and TRON

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

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

Diversification Opportunities for BRC and TRON

0.31

Correlation Coefficient

BRC  TRON

Weak diversification

The 3 months correlation between BRC and TRON is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BRC and TRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRON and BRC 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 BRC are associated (or correlated) with TRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRON has no effect on the direction of BRC i.e., BRC and TRON go up and down completely randomly.

Pair Corralation between BRC and TRON

If you would invest  15.00  in TRON on September 2, 2024 and sell it today you would earn a total of  5.00  from holding TRON or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.52%
Values	Daily Returns

BRC  vs.  TRON

BRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BRC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TRON

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRC and TRON

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

The idea behind BRC and TRON 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..