Correlation Between Technos SA and BlackRock

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

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

Diversification Opportunities for Technos SA and BlackRock

0.61

Correlation Coefficient

Technos SA  BlackRock

Poor diversification

The 3 months correlation between Technos and BlackRock is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Technos SA and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Technos SA 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 Technos SA are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Technos SA i.e., Technos SA and BlackRock go up and down completely randomly.

Pair Corralation between Technos SA and BlackRock

Assuming the 90 days trading horizon Technos SA is expected to generate 1.2 times less return on investment than BlackRock. In addition to that, Technos SA is 2.21 times more volatile than BlackRock. It trades about 0.08 of its total potential returns per unit of risk. BlackRock is currently generating about 0.2 per unit of volatility. If you would invest  7,872  in BlackRock on September 23, 2024 and sell it today you would earn a total of  1,713  from holding BlackRock or generate 21.76% return on investment over 90 days.

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

Technos SA  vs.  BlackRock

Technos SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Technos SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Technos SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

BlackRock

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BlackRock sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Technos SA and BlackRock

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

The idea behind Technos SA and BlackRock 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.