Correlation Between INSUN Environmental and Tamul Multimedia

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

By analyzing existing cross correlation between INSUN Environmental New and Tamul Multimedia Co, you can compare the effects of market volatilities on INSUN Environmental and Tamul Multimedia 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 INSUN Environmental with a short position of Tamul Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSUN Environmental and Tamul Multimedia.

Diversification Opportunities for INSUN Environmental and Tamul Multimedia

0.69

Correlation Coefficient

INSUN Environmental  Tamul Multimedia

Poor diversification

The 3 months correlation between INSUN and Tamul is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding INSUN Environmental New and Tamul Multimedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamul Multimedia and INSUN Environmental 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 INSUN Environmental New are associated (or correlated) with Tamul Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamul Multimedia has no effect on the direction of INSUN Environmental i.e., INSUN Environmental and Tamul Multimedia go up and down completely randomly.

Pair Corralation between INSUN Environmental and Tamul Multimedia

Assuming the 90 days trading horizon INSUN Environmental is expected to generate 1.15 times less return on investment than Tamul Multimedia. But when comparing it to its historical volatility, INSUN Environmental New is 1.71 times less risky than Tamul Multimedia. It trades about 0.38 of its potential returns per unit of risk. Tamul Multimedia Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  405,500  in Tamul Multimedia Co on October 12, 2024 and sell it today you would earn a total of  54,000  from holding Tamul Multimedia Co or generate 13.32% return on investment over 90 days.

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

INSUN Environmental New  vs.  Tamul Multimedia Co

INSUN Environmental New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INSUN Environmental New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INSUN Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tamul Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tamul Multimedia Co 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 INSUN Environmental and Tamul Multimedia

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

The idea behind INSUN Environmental New and Tamul Multimedia Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.