Correlation Between INNOX Advanced and TSI

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Can any of the company-specific risk be diversified away by investing in both INNOX Advanced and TSI 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 INNOX Advanced and TSI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and TSI Co, you can compare the effects of market volatilities on INNOX Advanced and TSI 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 INNOX Advanced with a short position of TSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and TSI.

Diversification Opportunities for INNOX Advanced and TSI

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between INNOX and TSI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and TSI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSI Co and INNOX Advanced 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 INNOX Advanced Materials are associated (or correlated) with TSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSI Co has no effect on the direction of INNOX Advanced i.e., INNOX Advanced and TSI go up and down completely randomly.

Pair Corralation between INNOX Advanced and TSI

Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 0.81 times more return on investment than TSI. However, INNOX Advanced Materials is 1.23 times less risky than TSI. It trades about 0.45 of its potential returns per unit of risk. TSI Co is currently generating about 0.19 per unit of risk. If you would invest  1,971,181  in INNOX Advanced Materials on October 12, 2024 and sell it today you would earn a total of  508,819  from holding INNOX Advanced Materials or generate 25.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

INNOX Advanced Materials  vs.  TSI Co

 Performance 
       Timeline  
INNOX Advanced Materials 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in INNOX Advanced Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, INNOX Advanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
TSI Co 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days TSI Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

INNOX Advanced and TSI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with INNOX Advanced and TSI

The main advantage of trading using opposite INNOX Advanced and TSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced position performs unexpectedly, TSI 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 TSI will offset losses from the drop in TSI's long position.
The idea behind INNOX Advanced Materials and TSI Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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