Correlation Between Triad Group and Applied Materials

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

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

Diversification Opportunities for Triad Group and Applied Materials

-0.31

Correlation Coefficient

Triad Group  Applied Materials

Very good diversification

The 3 months correlation between Triad and Applied is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group PLC and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Triad Group 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 Triad Group PLC are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Triad Group i.e., Triad Group and Applied Materials go up and down completely randomly.

Pair Corralation between Triad Group and Applied Materials

Assuming the 90 days trading horizon Triad Group PLC is expected to generate 0.8 times more return on investment than Applied Materials. However, Triad Group PLC is 1.24 times less risky than Applied Materials. It trades about 0.04 of its potential returns per unit of risk. Applied Materials is currently generating about -0.12 per unit of risk. If you would invest  26,834  in Triad Group PLC on September 26, 2024 and sell it today you would earn a total of  1,166  from holding Triad Group PLC or generate 4.35% return on investment over 90 days.

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

Triad Group PLC  vs.  Applied Materials

Triad Group PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Materials 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Triad Group and Applied Materials

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

The idea behind Triad Group PLC and Applied Materials 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.

Check out your portfolio center.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.