Correlation Between TCM Public and TMT Steel
Can any of the company-specific risk be diversified away by investing in both TCM Public and TMT Steel 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 TCM Public and TMT Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TCM Public and TMT Steel Public, you can compare the effects of market volatilities on TCM Public and TMT Steel 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 TCM Public with a short position of TMT Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCM Public and TMT Steel.
Diversification Opportunities for TCM Public and TMT Steel
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TCM and TMT is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding TCM Public and TMT Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Steel Public and TCM Public 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 TCM Public are associated (or correlated) with TMT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Steel Public has no effect on the direction of TCM Public i.e., TCM Public and TMT Steel go up and down completely randomly.
Pair Corralation between TCM Public and TMT Steel
Assuming the 90 days trading horizon TCM Public is expected to generate 1.01 times less return on investment than TMT Steel. In addition to that, TCM Public is 1.0 times more volatile than TMT Steel Public. It trades about 0.08 of its total potential returns per unit of risk. TMT Steel Public is currently generating about 0.08 per unit of volatility. If you would invest 509.00 in TMT Steel Public on September 3, 2024 and sell it today you would lose (177.00) from holding TMT Steel Public or give up 34.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TCM Public vs. TMT Steel Public
Performance |
| Timeline |
| TCM Public |
| TMT Steel Public |
TCM Public and TMT Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TCM Public and TMT Steel
The main advantage of trading using opposite TCM Public and TMT Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TCM Public position performs unexpectedly, TMT Steel 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 TMT Steel will offset losses from the drop in TMT Steel's long position.| TCM Public vs. STPI Public | TCM Public vs. Thai Vegetable Oil | TCM Public vs. Tycoons Worldwide Group | TCM Public vs. Ratchthani Leasing Public |
| TMT Steel vs. MCS Steel Public | TMT Steel vs. Thai Vegetable Oil | TMT Steel vs. Pacific Pipe Public | TMT Steel vs. Tipco Foods Public |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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