Correlation Between TCM Public and Italian Thai

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

By analyzing existing cross correlation between TCM Public and Italian Thai Development Public, you can compare the effects of market volatilities on TCM Public and Italian Thai 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 TCM Public with a short position of Italian Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCM Public and Italian Thai.

Diversification Opportunities for TCM Public and Italian Thai

0.84

Correlation Coefficient

TCM Public  Italian Thai

Very poor diversification

The 3 months correlation between TCM and Italian is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TCM Public and Italian Thai Development Publi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Italian Thai Develop and TCM Public 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 TCM Public are associated (or correlated) with Italian Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Italian Thai Develop has no effect on the direction of TCM Public i.e., TCM Public and Italian Thai go up and down completely randomly.

Pair Corralation between TCM Public and Italian Thai

Assuming the 90 days trading horizon TCM Public is expected to generate 1.02 times more return on investment than Italian Thai. However, TCM Public is 1.02 times more volatile than Italian Thai Development Public. It trades about -0.09 of its potential returns per unit of risk. Italian Thai Development Public is currently generating about -0.14 per unit of risk. If you would invest  86.00  in TCM Public on September 16, 2024 and sell it today you would lose (16.00) from holding TCM Public or give up 18.6% of portfolio value over 90 days.

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

TCM Public  vs.  Italian Thai Development Publi

TCM Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TCM Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Italian Thai Develop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Italian Thai Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with TCM Public and Italian Thai

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

The idea behind TCM Public and Italian Thai Development Public 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.