Correlation Between TCL Electronics and Kyocera

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

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

Diversification Opportunities for TCL Electronics and Kyocera

-0.1

Correlation Coefficient

TCL Electronics  Kyocera

Good diversification

The 3 months correlation between TCL and Kyocera is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding TCL Electronics Holdings and Kyocera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyocera and TCL Electronics 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 TCL Electronics Holdings are associated (or correlated) with Kyocera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyocera has no effect on the direction of TCL Electronics i.e., TCL Electronics and Kyocera go up and down completely randomly.

Pair Corralation between TCL Electronics and Kyocera

Assuming the 90 days horizon TCL Electronics Holdings is expected to generate 1.8 times more return on investment than Kyocera. However, TCL Electronics is 1.8 times more volatile than Kyocera. It trades about 0.07 of its potential returns per unit of risk. Kyocera is currently generating about -0.09 per unit of risk. If you would invest  60.00  in TCL Electronics Holdings on September 19, 2024 and sell it today you would earn a total of  10.00  from holding TCL Electronics Holdings or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

TCL Electronics Holdings  vs.  Kyocera

TCL Electronics Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TCL Electronics Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, TCL Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Kyocera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyocera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental 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 TCL Electronics and Kyocera

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

The idea behind TCL Electronics Holdings and Kyocera 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.