Correlation Between 2S Metal and TMC Industrial

Can any of the company-specific risk be diversified away by investing in both 2S Metal and TMC Industrial 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 2S Metal and TMC Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 2S Metal Public and TMC Industrial Public, you can compare the effects of market volatilities on 2S Metal and TMC Industrial 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 2S Metal with a short position of TMC Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2S Metal and TMC Industrial.

Diversification Opportunities for 2S Metal and TMC Industrial

0.94

Correlation Coefficient

2S Metal  TMC Industrial

Almost no diversification

The 3 months correlation between 2S Metal and TMC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding 2S Metal Public and TMC Industrial Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMC Industrial Public and 2S Metal 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 2S Metal Public are associated (or correlated) with TMC Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMC Industrial Public has no effect on the direction of 2S Metal i.e., 2S Metal and TMC Industrial go up and down completely randomly.

Pair Corralation between 2S Metal and TMC Industrial

Assuming the 90 days horizon 2S Metal Public is expected to generate 0.65 times more return on investment than TMC Industrial. However, 2S Metal Public is 1.53 times less risky than TMC Industrial. It trades about -0.2 of its potential returns per unit of risk. TMC Industrial Public is currently generating about -0.17 per unit of risk. If you would invest  271.00  in 2S Metal Public on December 28, 2024 and sell it today you would lose (53.00) from holding 2S Metal Public or give up 19.56% of portfolio value over 90 days.

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

2S Metal Public  vs.  TMC Industrial Public

2S Metal Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days 2S Metal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

TMC Industrial Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TMC Industrial Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with 2S Metal and TMC Industrial

The main advantage of trading using opposite 2S Metal and TMC Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2S Metal position performs unexpectedly, TMC Industrial 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 TMC Industrial will offset losses from the drop in TMC Industrial's long position.

The idea behind 2S Metal Public and TMC Industrial Public 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.