Correlation Between Link Reservations and TILT Holdings

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

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

Diversification Opportunities for Link Reservations and TILT Holdings

0.75

Correlation Coefficient

Link Reservations  TILT Holdings

Poor diversification

The 3 months correlation between Link and TILT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Link Reservations and TILT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TILT Holdings and Link Reservations 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 Link Reservations are associated (or correlated) with TILT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TILT Holdings has no effect on the direction of Link Reservations i.e., Link Reservations and TILT Holdings go up and down completely randomly.

Pair Corralation between Link Reservations and TILT Holdings

Given the investment horizon of 90 days Link Reservations is expected to under-perform the TILT Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Link Reservations is 1.11 times less risky than TILT Holdings. The pink sheet trades about -0.22 of its potential returns per unit of risk. The TILT Holdings is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  1.20  in TILT Holdings on September 5, 2024 and sell it today you would lose (0.60) from holding TILT Holdings or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Link Reservations  vs.  TILT Holdings

Link Reservations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Link Reservations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Link Reservations showed solid returns over the last few months and may actually be approaching a breakup point.

TILT Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TILT Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Link Reservations and TILT Holdings

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

The idea behind Link Reservations and TILT Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.