Correlation Between TCL Electronics and Vuzix Corp

Can any of the company-specific risk be diversified away by investing in both TCL Electronics and Vuzix Corp 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 Vuzix Corp 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 Vuzix Corp Cmn, you can compare the effects of market volatilities on TCL Electronics and Vuzix Corp 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 Vuzix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCL Electronics and Vuzix Corp.

Diversification Opportunities for TCL Electronics and Vuzix Corp

0.01

Correlation Coefficient

TCL Electronics  Vuzix Corp

Significant diversification

The 3 months correlation between TCL and Vuzix is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding TCL Electronics Holdings and Vuzix Corp Cmn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vuzix Corp Cmn 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 Vuzix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vuzix Corp Cmn has no effect on the direction of TCL Electronics i.e., TCL Electronics and Vuzix Corp go up and down completely randomly.

Pair Corralation between TCL Electronics and Vuzix Corp

Assuming the 90 days horizon TCL Electronics is expected to generate 6.52 times less return on investment than Vuzix Corp. But when comparing it to its historical volatility, TCL Electronics Holdings is 1.64 times less risky than Vuzix Corp. It trades about 0.07 of its potential returns per unit of risk. Vuzix Corp Cmn is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  103.00  in Vuzix Corp Cmn on September 19, 2024 and sell it today you would earn a total of  281.00  from holding Vuzix Corp Cmn or generate 272.82% return on investment over 90 days.

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

TCL Electronics Holdings  vs.  Vuzix Corp Cmn

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.

Vuzix Corp Cmn

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vuzix Corp Cmn are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Vuzix Corp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TCL Electronics and Vuzix Corp

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

The idea behind TCL Electronics Holdings and Vuzix Corp Cmn 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.