Correlation Between Tex Ray and Concord Securities

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

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

Diversification Opportunities for Tex Ray and Concord Securities

0.64

Correlation Coefficient

Tex Ray  Concord Securities

Poor diversification

The 3 months correlation between Tex and Concord is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tex Ray Industrial Co and Concord Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Securities and Tex Ray 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 Tex Ray Industrial Co are associated (or correlated) with Concord Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Securities has no effect on the direction of Tex Ray i.e., Tex Ray and Concord Securities go up and down completely randomly.

Pair Corralation between Tex Ray and Concord Securities

Assuming the 90 days trading horizon Tex Ray Industrial Co is expected to under-perform the Concord Securities. But the stock apears to be less risky and, when comparing its historical volatility, Tex Ray Industrial Co is 1.77 times less risky than Concord Securities. The stock trades about -0.11 of its potential returns per unit of risk. The Concord Securities Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,365  in Concord Securities Co on October 13, 2024 and sell it today you would earn a total of  20.00  from holding Concord Securities Co or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Tex Ray Industrial Co  vs.  Concord Securities Co

Tex Ray Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tex Ray Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Concord Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Concord Securities 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 Tex Ray and Concord Securities

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

The idea behind Tex Ray Industrial Co and Concord Securities 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.