Correlation Between TT Electronics and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both TT Electronics and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT, you can compare the effects of market volatilities on TT Electronics and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and CDL INVESTMENT.
Diversification Opportunities for TT Electronics and CDL INVESTMENT
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 7TT and CDL is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of TT Electronics i.e., TT Electronics and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between TT Electronics and CDL INVESTMENT
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the CDL INVESTMENT. In addition to that, TT Electronics is 1.2 times more volatile than CDL INVESTMENT. It trades about -0.36 of its total potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.2 per unit of volatility. If you would invest 44.00 in CDL INVESTMENT on October 11, 2024 and sell it today you would lose (3.00) from holding CDL INVESTMENT or give up 6.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. CDL INVESTMENT
Performance |
| Timeline |
| TT Electronics PLC |
| CDL INVESTMENT |
TT Electronics and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and CDL INVESTMENT
The main advantage of trading using opposite TT Electronics and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT'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 |
| CDL INVESTMENT vs. SOGECLAIR SA INH | CDL INVESTMENT vs. ScanSource | CDL INVESTMENT vs. SEALED AIR | CDL INVESTMENT vs. Pentair plc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |