Correlation Between De Licacy and Tex Ray

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

By analyzing existing cross correlation between De Licacy Industrial and Tex Ray Industrial Co, you can compare the effects of market volatilities on De Licacy and Tex Ray 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 De Licacy with a short position of Tex Ray. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Licacy and Tex Ray.

Diversification Opportunities for De Licacy and Tex Ray

0.45

Correlation Coefficient

De Licacy  Tex Ray

Very weak diversification

The 3 months correlation between 1464 and Tex is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding De Licacy Industrial and Tex Ray Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Ray Industrial and De Licacy 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 De Licacy Industrial are associated (or correlated) with Tex Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Ray Industrial has no effect on the direction of De Licacy i.e., De Licacy and Tex Ray go up and down completely randomly.

Pair Corralation between De Licacy and Tex Ray

Assuming the 90 days trading horizon De Licacy Industrial is expected to generate 2.66 times more return on investment than Tex Ray. However, De Licacy is 2.66 times more volatile than Tex Ray Industrial Co. It trades about 0.16 of its potential returns per unit of risk. Tex Ray Industrial Co is currently generating about -0.38 per unit of risk. If you would invest  1,580  in De Licacy Industrial on September 19, 2024 and sell it today you would earn a total of  155.00  from holding De Licacy Industrial or generate 9.81% return on investment over 90 days.

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

De Licacy Industrial  vs.  Tex Ray Industrial Co

De Licacy Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Licacy Industrial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, De Licacy showed solid returns over the last few months and may actually be approaching a breakup point.

Tex Ray Industrial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tex Ray Industrial Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tex Ray is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with De Licacy and Tex Ray

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

The idea behind De Licacy Industrial and Tex Ray Industrial 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.