Correlation Between Timken and Perception Capital
Can any of the company-specific risk be diversified away by investing in both Timken and Perception Capital 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 Timken and Perception Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timken Company and Perception Capital Corp, you can compare the effects of market volatilities on Timken and Perception Capital 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 Timken with a short position of Perception Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timken and Perception Capital.
Diversification Opportunities for Timken and Perception Capital
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Timken and Perception is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company and Perception Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perception Capital Corp and Timken 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 Timken Company are associated (or correlated) with Perception Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perception Capital Corp has no effect on the direction of Timken i.e., Timken and Perception Capital go up and down completely randomly.
Pair Corralation between Timken and Perception Capital
If you would invest 7,300 in Timken Company on September 3, 2024 and sell it today you would earn a total of 445.00 from holding Timken Company or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Timken Company vs. Perception Capital Corp
Performance |
| Timeline |
| Timken Company |
| Perception Capital Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Timken and Perception Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timken and Perception Capital
The main advantage of trading using opposite Timken and Perception Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken position performs unexpectedly, Perception Capital 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 Perception Capital will offset losses from the drop in Perception Capital's long position.The idea behind Timken Company and Perception Capital Corp 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.| Perception Capital vs. Steven Madden | Perception Capital vs. Timken Company | Perception Capital vs. Virgin Group Acquisition | Perception Capital vs. Trupanion |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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