Correlation Between Sea Land and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Sea Land and Tehmag Foods 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 Sea Land and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea Land Integrated and Tehmag Foods, you can compare the effects of market volatilities on Sea Land and Tehmag Foods 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 Sea Land with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Land and Tehmag Foods.
Diversification Opportunities for Sea Land and Tehmag Foods
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sea and Tehmag is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sea Land Integrated and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and Sea Land 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 Sea Land Integrated are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Sea Land i.e., Sea Land and Tehmag Foods go up and down completely randomly.
Pair Corralation between Sea Land and Tehmag Foods
Assuming the 90 days trading horizon Sea Land Integrated is expected to generate 2.96 times more return on investment than Tehmag Foods. However, Sea Land is 2.96 times more volatile than Tehmag Foods. It trades about 0.03 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.08 per unit of risk. If you would invest 2,250 in Sea Land Integrated on October 24, 2024 and sell it today you would earn a total of 195.00 from holding Sea Land Integrated or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Sea Land Integrated vs. Tehmag Foods
Performance |
| Timeline |
| Sea Land Integrated |
| Tehmag Foods |
Sea Land and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea Land and Tehmag Foods
The main advantage of trading using opposite Sea Land and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea Land position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| Sea Land vs. Tehmag Foods | Sea Land vs. Universal Vision Biotechnology | Sea Land vs. Insyde Software | Sea Land vs. Chicony Power Technology |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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