Correlation Between Steel Public and TCM Public
Can any of the company-specific risk be diversified away by investing in both Steel Public and TCM Public 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 Steel Public and TCM Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Steel Public and TCM Public, you can compare the effects of market volatilities on Steel Public and TCM Public 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 Steel Public with a short position of TCM Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Public and TCM Public.
Diversification Opportunities for Steel Public and TCM Public
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and TCM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Steel Public and TCM Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCM Public and Steel 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 The Steel Public are associated (or correlated) with TCM Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCM Public has no effect on the direction of Steel Public i.e., Steel Public and TCM Public go up and down completely randomly.
Pair Corralation between Steel Public and TCM Public
Assuming the 90 days trading horizon Steel Public is expected to generate 1.01 times less return on investment than TCM Public. In addition to that, Steel Public is 1.0 times more volatile than TCM Public. It trades about 0.11 of its total potential returns per unit of risk. TCM Public is currently generating about 0.11 per unit of volatility. If you would invest 84.00 in TCM Public on August 28, 2024 and sell it today you would lose (11.00) from holding TCM Public or give up 13.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Steel Public vs. TCM Public
Performance |
| Timeline |
| Steel Public |
| TCM Public |
Steel Public and TCM Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Public and TCM Public
The main advantage of trading using opposite Steel Public and TCM Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Public position performs unexpectedly, TCM Public 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 TCM Public will offset losses from the drop in TCM Public's long position.| Steel Public vs. TMT Steel Public | Steel Public vs. Tycoons Worldwide Group | Steel Public vs. Thai German Products Public | Steel Public vs. Siam Steel Service |
| TCM Public vs. SCB X Public | TCM Public vs. Kasikornbank Public | TCM Public vs. PTT Public | TCM Public vs. Kasikornbank 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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