Correlation Between Raytech Holding and Toro

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

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

Diversification Opportunities for Raytech Holding and Toro

0.05

Correlation Coefficient

Raytech Holding  Toro

Significant diversification

The 3 months correlation between Raytech and Toro is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro and Raytech Holding 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 Raytech Holding Limited are associated (or correlated) with Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of Raytech Holding i.e., Raytech Holding and Toro go up and down completely randomly.

Pair Corralation between Raytech Holding and Toro

Considering the 90-day investment horizon Raytech Holding Limited is expected to under-perform the Toro. In addition to that, Raytech Holding is 3.79 times more volatile than Toro Co. It trades about -0.03 of its total potential returns per unit of risk. Toro Co is currently generating about 0.06 per unit of volatility. If you would invest  8,436  in Toro Co on September 16, 2024 and sell it today you would earn a total of  396.00  from holding Toro Co or generate 4.69% return on investment over 90 days.

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

Raytech Holding Limited  vs.  Toro Co

Raytech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Toro

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Toro Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Toro is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Raytech Holding and Toro

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

The idea behind Raytech Holding Limited and Toro 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.