Correlation Between Iat Automobile and TCL Corp

Can any of the company-specific risk be diversified away by investing in both Iat Automobile and TCL Corp 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 Iat Automobile and TCL Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iat Automobile Technology and TCL Corp, you can compare the effects of market volatilities on Iat Automobile and TCL Corp 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 Iat Automobile with a short position of TCL Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iat Automobile and TCL Corp.

Diversification Opportunities for Iat Automobile and TCL Corp

-0.53

Correlation Coefficient

Iat Automobile  TCL Corp

Excellent diversification

The 3 months correlation between Iat and TCL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and TCL Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCL Corp and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with TCL Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCL Corp has no effect on the direction of Iat Automobile i.e., Iat Automobile and TCL Corp go up and down completely randomly.

Pair Corralation between Iat Automobile and TCL Corp

Assuming the 90 days trading horizon Iat Automobile Technology is expected to generate 1.85 times more return on investment than TCL Corp. However, Iat Automobile is 1.85 times more volatile than TCL Corp. It trades about 0.08 of its potential returns per unit of risk. TCL Corp is currently generating about -0.12 per unit of risk. If you would invest  1,145  in Iat Automobile Technology on December 22, 2024 and sell it today you would earn a total of  148.00  from holding Iat Automobile Technology or generate 12.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Iat Automobile Technology  vs.  TCL Corp

Iat Automobile Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

TCL Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days TCL Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Iat Automobile and TCL Corp

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

The idea behind Iat Automobile Technology and TCL 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.