Correlation Between TAT Technologies and Biomedix Incubator
Can any of the company-specific risk be diversified away by investing in both TAT Technologies and Biomedix Incubator 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 TAT Technologies and Biomedix Incubator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAT Technologies and Biomedix Incubator, you can compare the effects of market volatilities on TAT Technologies and Biomedix Incubator 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 TAT Technologies with a short position of Biomedix Incubator. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAT Technologies and Biomedix Incubator.
Diversification Opportunities for TAT Technologies and Biomedix Incubator
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TAT and Biomedix is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding TAT Technologies and Biomedix Incubator in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomedix Incubator and TAT Technologies 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 TAT Technologies are associated (or correlated) with Biomedix Incubator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomedix Incubator has no effect on the direction of TAT Technologies i.e., TAT Technologies and Biomedix Incubator go up and down completely randomly.
Pair Corralation between TAT Technologies and Biomedix Incubator
Assuming the 90 days trading horizon TAT Technologies is expected to generate 1.38 times less return on investment than Biomedix Incubator. But when comparing it to its historical volatility, TAT Technologies is 2.17 times less risky than Biomedix Incubator. It trades about 0.17 of its potential returns per unit of risk. Biomedix Incubator is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 692,000 in Biomedix Incubator on August 29, 2024 and sell it today you would earn a total of 1,235,000 from holding Biomedix Incubator or generate 178.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAT Technologies vs. Biomedix Incubator
Performance |
| Timeline |
| TAT Technologies |
| Biomedix Incubator |
TAT Technologies and Biomedix Incubator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAT Technologies and Biomedix Incubator
The main advantage of trading using opposite TAT Technologies and Biomedix Incubator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAT Technologies position performs unexpectedly, Biomedix Incubator 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 Biomedix Incubator will offset losses from the drop in Biomedix Incubator's long position.| TAT Technologies vs. Bet Shemesh Engines | TAT Technologies vs. Orbit Technologies | TAT Technologies vs. Tower Semiconductor | TAT Technologies vs. Elron Electronic Industries |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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