Correlation Between TT Electronics and OtelloASA
Can any of the company-specific risk be diversified away by investing in both TT Electronics and OtelloASA 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 OtelloASA 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 Otello ASA, you can compare the effects of market volatilities on TT Electronics and OtelloASA 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 OtelloASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and OtelloASA.
Diversification Opportunities for TT Electronics and OtelloASA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 7TT and OtelloASA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and Otello ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otello ASA 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 OtelloASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otello ASA has no effect on the direction of TT Electronics i.e., TT Electronics and OtelloASA go up and down completely randomly.
Pair Corralation between TT Electronics and OtelloASA
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the OtelloASA. In addition to that, TT Electronics is 1.65 times more volatile than Otello ASA. It trades about -0.4 of its total potential returns per unit of risk. Otello ASA is currently generating about -0.06 per unit of volatility. If you would invest 65.00 in Otello ASA on November 8, 2024 and sell it today you would lose (1.00) from holding Otello ASA or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. Otello ASA
Performance |
| Timeline |
| TT Electronics PLC |
| Otello ASA |
TT Electronics and OtelloASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and OtelloASA
The main advantage of trading using opposite TT Electronics and OtelloASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics position performs unexpectedly, OtelloASA 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 OtelloASA will offset losses from the drop in OtelloASA's long position.| TT Electronics vs. Dentsply Sirona | TT Electronics vs. Khiron Life Sciences | TT Electronics vs. COSMOSTEEL HLDGS | TT Electronics vs. ELL ENVIRONHLDGS HD 0001 |
| OtelloASA vs. Investment Latour AB | OtelloASA vs. JLF INVESTMENT | OtelloASA vs. MEDCAW INVESTMENTS LS 01 | OtelloASA vs. AOYAMA TRADING |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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