Correlation Between Shiny Chemical and TTET Union

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

By analyzing existing cross correlation between Shiny Chemical Industrial and TTET Union Corp, you can compare the effects of market volatilities on Shiny Chemical and TTET Union 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 Shiny Chemical with a short position of TTET Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and TTET Union.

Diversification Opportunities for Shiny Chemical and TTET Union

0.45

Correlation Coefficient

Shiny Chemical  TTET Union

Very weak diversification

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

Pair Corralation between Shiny Chemical and TTET Union

Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to under-perform the TTET Union. In addition to that, Shiny Chemical is 2.3 times more volatile than TTET Union Corp. It trades about -0.05 of its total potential returns per unit of risk. TTET Union Corp is currently generating about 0.09 per unit of volatility. If you would invest  14,650  in TTET Union Corp on December 21, 2024 and sell it today you would earn a total of  550.00  from holding TTET Union Corp or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.21%
Values	Daily Returns

Shiny Chemical Industrial  vs.  TTET Union Corp

Shiny Chemical Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shiny Chemical Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shiny Chemical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TTET Union Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TTET Union Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, TTET Union 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 Shiny Chemical and TTET Union

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

The idea behind Shiny Chemical Industrial and TTET Union Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.