Correlation Between Tuksu Engineering and Microfriend

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

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

Diversification Opportunities for Tuksu Engineering and Microfriend

0.25

Correlation Coefficient

Tuksu Engineering  Microfriend

Modest diversification

The 3 months correlation between Tuksu and Microfriend is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Tuksu Engineering Construction and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend and Tuksu Engineering 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 Tuksu Engineering ConstructionLtd are associated (or correlated) with Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Tuksu Engineering i.e., Tuksu Engineering and Microfriend go up and down completely randomly.

Pair Corralation between Tuksu Engineering and Microfriend

Assuming the 90 days trading horizon Tuksu Engineering ConstructionLtd is expected to generate 0.56 times more return on investment than Microfriend. However, Tuksu Engineering ConstructionLtd is 1.8 times less risky than Microfriend. It trades about 0.04 of its potential returns per unit of risk. Microfriend is currently generating about 0.02 per unit of risk. If you would invest  621,000  in Tuksu Engineering ConstructionLtd on December 26, 2024 and sell it today you would earn a total of  19,000  from holding Tuksu Engineering ConstructionLtd or generate 3.06% return on investment over 90 days.

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

Tuksu Engineering Construction  vs.  Microfriend

Tuksu Engineering

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tuksu Engineering ConstructionLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tuksu Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Microfriend

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microfriend are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Microfriend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tuksu Engineering and Microfriend

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

The idea behind Tuksu Engineering ConstructionLtd and Microfriend 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.