Correlation Between R Co and Templeton Asian

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

By analyzing existing cross correlation between R co Valor F and Templeton Asian Bond, you can compare the effects of market volatilities on R Co and Templeton Asian 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 R Co with a short position of Templeton Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of R Co and Templeton Asian.

Diversification Opportunities for R Co and Templeton Asian

0.33

Correlation Coefficient

R Co  Templeton Asian

Weak diversification

The 3 months correlation between 0P00017SX2 and Templeton is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding R co Valor F and Templeton Asian Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Asian Bond and R Co 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 R co Valor F are associated (or correlated) with Templeton Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Asian Bond has no effect on the direction of R Co i.e., R Co and Templeton Asian go up and down completely randomly.

Pair Corralation between R Co and Templeton Asian

Assuming the 90 days trading horizon R Co is expected to generate 1.75 times less return on investment than Templeton Asian. In addition to that, R Co is 1.41 times more volatile than Templeton Asian Bond. It trades about 0.04 of its total potential returns per unit of risk. Templeton Asian Bond is currently generating about 0.1 per unit of volatility. If you would invest  1,772  in Templeton Asian Bond on October 8, 2024 and sell it today you would earn a total of  40.00  from holding Templeton Asian Bond or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

R co Valor F  vs.  Templeton Asian Bond

R co Valor

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days R co Valor F has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, R Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Templeton Asian Bond

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Asian Bond are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Templeton Asian is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with R Co and Templeton Asian

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

The idea behind R co Valor F and Templeton Asian Bond 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.