Correlation Between Tex Ray and Eternal Materials
Can any of the company-specific risk be diversified away by investing in both Tex Ray and Eternal 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 Tex Ray and Eternal Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tex Ray Industrial Co and Eternal Materials Co, you can compare the effects of market volatilities on Tex Ray and Eternal 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 Tex Ray with a short position of Eternal Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tex Ray and Eternal Materials.
Diversification Opportunities for Tex Ray and Eternal Materials
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tex and Eternal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tex Ray Industrial Co and Eternal Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Materials and Tex Ray 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 Tex Ray Industrial Co are associated (or correlated) with Eternal Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Materials has no effect on the direction of Tex Ray i.e., Tex Ray and Eternal Materials go up and down completely randomly.
Pair Corralation between Tex Ray and Eternal Materials
Assuming the 90 days trading horizon Tex Ray Industrial Co is expected to under-perform the Eternal Materials. But the stock apears to be less risky and, when comparing its historical volatility, Tex Ray Industrial Co is 1.12 times less risky than Eternal Materials. The stock trades about -0.01 of its potential returns per unit of risk. The Eternal Materials Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,205 in Eternal Materials Co on November 19, 2024 and sell it today you would lose (305.00) from holding Eternal Materials Co or give up 9.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.79% |
Values | Daily Returns |
Tex Ray Industrial Co vs. Eternal Materials Co
Performance |
Timeline |
Tex Ray Industrial |
Eternal Materials |
Tex Ray and Eternal Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tex Ray and Eternal Materials
The main advantage of trading using opposite Tex Ray and Eternal Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tex Ray position performs unexpectedly, Eternal 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 Eternal Materials will offset losses from the drop in Eternal Materials' long position.Tex Ray vs. Tainan Enterprises Co | Tex Ray vs. De Licacy Industrial | Tex Ray vs. Nien Hsing Textile | Tex Ray vs. Wisher Industrial Co |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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