Correlation Between TRI CHEMICAL and Focus Home

Can any of the company-specific risk be diversified away by investing in both TRI CHEMICAL and Focus Home 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 TRI CHEMICAL and Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRI CHEMICAL LABORATINC and Focus Home Interactive, you can compare the effects of market volatilities on TRI CHEMICAL and Focus Home 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 TRI CHEMICAL with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRI CHEMICAL and Focus Home.

Diversification Opportunities for TRI CHEMICAL and Focus Home

-0.43

Correlation Coefficient

TRI CHEMICAL  Focus Home

Very good diversification

The 3 months correlation between TRI and Focus is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding TRI CHEMICAL LABORATINC and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive and TRI 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 TRI CHEMICAL LABORATINC are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of TRI CHEMICAL i.e., TRI CHEMICAL and Focus Home go up and down completely randomly.

Pair Corralation between TRI CHEMICAL and Focus Home

Assuming the 90 days horizon TRI CHEMICAL LABORATINC is expected to generate 0.67 times more return on investment than Focus Home. However, TRI CHEMICAL LABORATINC is 1.5 times less risky than Focus Home. It trades about 0.03 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.02 per unit of risk. If you would invest  1,640  in TRI CHEMICAL LABORATINC on December 18, 2024 and sell it today you would earn a total of  460.00  from holding TRI CHEMICAL LABORATINC or generate 28.05% return on investment over 90 days.

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

TRI CHEMICAL LABORATINC  vs.  Focus Home Interactive

TRI CHEMICAL LABORATINC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRI CHEMICAL LABORATINC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRI CHEMICAL reported solid returns over the last few months and may actually be approaching a breakup point.

Focus Home Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Focus Home Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Focus Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRI CHEMICAL and Focus Home

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

The idea behind TRI CHEMICAL LABORATINC and Focus Home Interactive 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.