Correlation Between TT Electronics and BC IRON
Can any of the company-specific risk be diversified away by investing in both TT Electronics and BC IRON 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 TT Electronics and BC IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and BC IRON, you can compare the effects of market volatilities on TT Electronics and BC IRON 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 TT Electronics with a short position of BC IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and BC IRON.
Diversification Opportunities for TT Electronics and BC IRON
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 7TT and BC3 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON and TT Electronics 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 TT Electronics PLC are associated (or correlated) with BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of TT Electronics i.e., TT Electronics and BC IRON go up and down completely randomly.
Pair Corralation between TT Electronics and BC IRON
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the BC IRON. But the stock apears to be less risky and, when comparing its historical volatility, TT Electronics PLC is 1.33 times less risky than BC IRON. The stock trades about -0.36 of its potential returns per unit of risk. The BC IRON is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 16.00 in BC IRON on October 11, 2024 and sell it today you would earn a total of 0.00 from holding BC IRON or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. BC IRON
Performance |
| Timeline |
| TT Electronics PLC |
| BC IRON |
TT Electronics and BC IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and BC IRON
The main advantage of trading using opposite TT Electronics and BC IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics position performs unexpectedly, BC IRON 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 BC IRON will offset losses from the drop in BC IRON's long position.| TT Electronics vs. ADRIATIC METALS LS 013355 | TT Electronics vs. GREENX METALS LTD | TT Electronics vs. Transport International Holdings | TT Electronics vs. Tokyu Construction Co |
| BC IRON vs. Gold Road Resources | BC IRON vs. TRAINLINE PLC LS | BC IRON vs. SBM OFFSHORE | BC IRON vs. Treasury Wine Estates |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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