Correlation Between Trane Technologies and Comba Telecom

Can any of the company-specific risk be diversified away by investing in both Trane Technologies and Comba Telecom 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 Trane Technologies and Comba Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trane Technologies plc and Comba Telecom Systems, you can compare the effects of market volatilities on Trane Technologies and Comba Telecom 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 Trane Technologies with a short position of Comba Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trane Technologies and Comba Telecom.

Diversification Opportunities for Trane Technologies and Comba Telecom

-0.68

Correlation Coefficient

Trane Technologies  Comba Telecom

Excellent diversification

The 3 months correlation between Trane and Comba is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Trane Technologies plc and Comba Telecom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comba Telecom Systems and Trane Technologies 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 Trane Technologies plc are associated (or correlated) with Comba Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comba Telecom Systems has no effect on the direction of Trane Technologies i.e., Trane Technologies and Comba Telecom go up and down completely randomly.

Pair Corralation between Trane Technologies and Comba Telecom

Assuming the 90 days horizon Trane Technologies plc is expected to under-perform the Comba Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Trane Technologies plc is 3.2 times less risky than Comba Telecom. The stock trades about -0.11 of its potential returns per unit of risk. The Comba Telecom Systems is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Comba Telecom Systems on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Comba Telecom Systems or generate 9.09% return on investment over 90 days.

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

Trane Technologies plc  vs.  Comba Telecom Systems

Trane Technologies plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trane Technologies plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Trane Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Comba Telecom Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Comba Telecom Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Comba Telecom may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Trane Technologies and Comba Telecom

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

The idea behind Trane Technologies plc and Comba Telecom Systems 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.