Correlation Between Trio Tech and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Trio Tech and Bristol Myers 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 Trio Tech and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trio Tech International and Bristol Myers Squibb, you can compare the effects of market volatilities on Trio Tech and Bristol Myers 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 Trio Tech with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trio Tech and Bristol Myers.
Diversification Opportunities for Trio Tech and Bristol Myers
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trio and Bristol is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and Trio Tech 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 Trio Tech International are associated (or correlated) with Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Trio Tech i.e., Trio Tech and Bristol Myers go up and down completely randomly.
Pair Corralation between Trio Tech and Bristol Myers
Considering the 90-day investment horizon Trio Tech International is expected to generate 0.87 times more return on investment than Bristol Myers. However, Trio Tech International is 1.15 times less risky than Bristol Myers. It trades about 0.02 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.0 per unit of risk. If you would invest 573.00 in Trio Tech International on September 24, 2024 and sell it today you would earn a total of 46.00 from holding Trio Tech International or generate 8.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 61.93% |
Values | Daily Returns |
Trio Tech International vs. Bristol Myers Squibb
Performance |
Timeline |
Trio Tech International |
Bristol Myers Squibb |
Trio Tech and Bristol Myers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Trio Tech and Bristol Myers
The main advantage of trading using opposite Trio Tech and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trio Tech position performs unexpectedly, Bristol Myers 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 Bristol Myers will offset losses from the drop in Bristol Myers' long position.Trio Tech vs. Aehr Test Systems | Trio Tech vs. Camtek | Trio Tech vs. Nova | Trio Tech vs. Axcelis Technologies |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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