Correlation Between TCL Corp and Bomesc Offshore

Can any of the company-specific risk be diversified away by investing in both TCL Corp and Bomesc Offshore 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 TCL Corp and Bomesc Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TCL Corp and Bomesc Offshore Engineering, you can compare the effects of market volatilities on TCL Corp and Bomesc Offshore 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 TCL Corp with a short position of Bomesc Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCL Corp and Bomesc Offshore.

Diversification Opportunities for TCL Corp and Bomesc Offshore

0.46

Correlation Coefficient

TCL Corp  Bomesc Offshore

Very weak diversification

The 3 months correlation between TCL and Bomesc is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding TCL Corp and Bomesc Offshore Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bomesc Offshore Engi and TCL Corp 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 TCL Corp are associated (or correlated) with Bomesc Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bomesc Offshore Engi has no effect on the direction of TCL Corp i.e., TCL Corp and Bomesc Offshore go up and down completely randomly.

Pair Corralation between TCL Corp and Bomesc Offshore

Assuming the 90 days trading horizon TCL Corp is expected to generate 1.14 times more return on investment than Bomesc Offshore. However, TCL Corp is 1.14 times more volatile than Bomesc Offshore Engineering. It trades about 0.15 of its potential returns per unit of risk. Bomesc Offshore Engineering is currently generating about -0.29 per unit of risk. If you would invest  461.00  in TCL Corp on October 5, 2024 and sell it today you would earn a total of  27.00  from holding TCL Corp or generate 5.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TCL Corp  vs.  Bomesc Offshore Engineering

TCL Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TCL Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TCL Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bomesc Offshore Engi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bomesc Offshore Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with TCL Corp and Bomesc Offshore

The main advantage of trading using opposite TCL Corp and Bomesc Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TCL Corp position performs unexpectedly, Bomesc Offshore 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 Bomesc Offshore will offset losses from the drop in Bomesc Offshore's long position.

The idea behind TCL Corp and Bomesc Offshore Engineering 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.