Correlation Between Detection Technology and Trainers House

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

Diversification Opportunities for Detection Technology and Trainers House

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Detection and Trainers is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Detection Technology OY and Trainers House Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainers House Oyj and Detection Technology 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 Detection Technology OY are associated (or correlated) with Trainers House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainers House Oyj has no effect on the direction of Detection Technology i.e., Detection Technology and Trainers House go up and down completely randomly.

Pair Corralation between Detection Technology and Trainers House

Assuming the 90 days trading horizon Detection Technology OY is expected to under-perform the Trainers House. But the stock apears to be less risky and, when comparing its historical volatility, Detection Technology OY is 1.36 times less risky than Trainers House. The stock trades about -0.54 of its potential returns per unit of risk. The Trainers House Oyj is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Trainers House Oyj on August 28, 2024 and sell it today you would lose (4.00) from holding Trainers House Oyj or give up 1.75% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Detection Technology OY  vs.  Trainers House Oyj

 Performance 
       Timeline  
Detection Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Detection Technology OY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Trainers House Oyj 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Trainers House Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Detection Technology and Trainers House Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Detection Technology and Trainers House

The main advantage of trading using opposite Detection Technology and Trainers House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Detection Technology position performs unexpectedly, Trainers House 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 Trainers House will offset losses from the drop in Trainers House's long position.
The idea behind Detection Technology OY and Trainers House Oyj 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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