Correlation Between Torque Lifestyle and Aryzta AG

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

By analyzing existing cross correlation between Torque Lifestyle Brands and Aryzta AG PK, you can compare the effects of market volatilities on Torque Lifestyle and Aryzta AG 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 Torque Lifestyle with a short position of Aryzta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torque Lifestyle and Aryzta AG.

Diversification Opportunities for Torque Lifestyle and Aryzta AG

0.6

Correlation Coefficient

Torque Lifestyle  Aryzta AG

Poor diversification

The 3 months correlation between Torque and Aryzta is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Torque Lifestyle Brands and Aryzta AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryzta AG PK and Torque Lifestyle 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 Torque Lifestyle Brands are associated (or correlated) with Aryzta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryzta AG PK has no effect on the direction of Torque Lifestyle i.e., Torque Lifestyle and Aryzta AG go up and down completely randomly.

Pair Corralation between Torque Lifestyle and Aryzta AG

Given the investment horizon of 90 days Torque Lifestyle Brands is expected to generate 18.04 times more return on investment than Aryzta AG. However, Torque Lifestyle is 18.04 times more volatile than Aryzta AG PK. It trades about 0.1 of its potential returns per unit of risk. Aryzta AG PK is currently generating about -0.11 per unit of risk. If you would invest  0.59  in Torque Lifestyle Brands on September 3, 2024 and sell it today you would lose (0.16) from holding Torque Lifestyle Brands or give up 27.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Torque Lifestyle Brands  vs.  Aryzta AG PK

Torque Lifestyle Brands

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Torque Lifestyle Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Torque Lifestyle sustained solid returns over the last few months and may actually be approaching a breakup point.

Aryzta AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aryzta AG PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Torque Lifestyle and Aryzta AG

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

The idea behind Torque Lifestyle Brands and Aryzta AG PK 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.