Correlation Between Tel Instrument and Spanish Broadcasting

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

By analyzing existing cross correlation between Tel Instrument Electronics Corp and Spanish Broadcasting System, you can compare the effects of market volatilities on Tel Instrument and Spanish Broadcasting 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 Tel Instrument with a short position of Spanish Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Instrument and Spanish Broadcasting.

Diversification Opportunities for Tel Instrument and Spanish Broadcasting

-0.15

Correlation Coefficient

Tel Instrument  Spanish Broadcasting

Good diversification

The 3 months correlation between Tel and Spanish is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tel Instrument Electronics Cor and Spanish Broadcasting System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spanish Broadcasting and Tel Instrument 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 Tel Instrument Electronics Corp are associated (or correlated) with Spanish Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spanish Broadcasting has no effect on the direction of Tel Instrument i.e., Tel Instrument and Spanish Broadcasting go up and down completely randomly.

Pair Corralation between Tel Instrument and Spanish Broadcasting

If you would invest  65.00  in Spanish Broadcasting System on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Spanish Broadcasting System or generate 0.0% return on investment over 90 days.

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

Tel Instrument Electronics Cor  vs.  Spanish Broadcasting System

Tel Instrument Elect

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tel Instrument Electronics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Tel Instrument is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Spanish Broadcasting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spanish Broadcasting System has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Spanish Broadcasting is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tel Instrument and Spanish Broadcasting

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

The idea behind Tel Instrument Electronics Corp and Spanish Broadcasting System 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.