Correlation Between Telecoms Informatics and Transimex Transportation

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

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

Diversification Opportunities for Telecoms Informatics and Transimex Transportation

-0.49

Correlation Coefficient

Telecoms Informatics  Transimex Transportation

Very good diversification

The 3 months correlation between Telecoms and Transimex is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Telecoms Informatics JSC and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation and Telecoms Informatics 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 Telecoms Informatics JSC are associated (or correlated) with Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of Telecoms Informatics i.e., Telecoms Informatics and Transimex Transportation go up and down completely randomly.

Pair Corralation between Telecoms Informatics and Transimex Transportation

Assuming the 90 days trading horizon Telecoms Informatics JSC is expected to generate 1.29 times more return on investment than Transimex Transportation. However, Telecoms Informatics is 1.29 times more volatile than Transimex Transportation JSC. It trades about 0.11 of its potential returns per unit of risk. Transimex Transportation JSC is currently generating about -0.02 per unit of risk. If you would invest  1,185,000  in Telecoms Informatics JSC on September 23, 2024 and sell it today you would earn a total of  180,000  from holding Telecoms Informatics JSC or generate 15.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.08%
Values	Daily Returns

Telecoms Informatics JSC  vs.  Transimex Transportation JSC

Telecoms Informatics JSC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telecoms Informatics JSC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Telecoms Informatics displayed solid returns over the last few months and may actually be approaching a breakup point.

Transimex Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transimex Transportation JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Transimex Transportation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telecoms Informatics and Transimex Transportation

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

The idea behind Telecoms Informatics JSC and Transimex Transportation JSC 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.