Correlation Between Solution Advanced and Tuksu Engineering

Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Tuksu Engineering 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 Solution Advanced and Tuksu Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solution Advanced Technology and Tuksu Engineering ConstructionLtd, you can compare the effects of market volatilities on Solution Advanced and Tuksu Engineering 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 Solution Advanced with a short position of Tuksu Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Tuksu Engineering.

Diversification Opportunities for Solution Advanced and Tuksu Engineering

0.09

Correlation Coefficient

Solution Advanced  Tuksu Engineering

Significant diversification

The 3 months correlation between Solution and Tuksu is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Tuksu Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuksu Engineering and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Tuksu Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuksu Engineering has no effect on the direction of Solution Advanced i.e., Solution Advanced and Tuksu Engineering go up and down completely randomly.

Pair Corralation between Solution Advanced and Tuksu Engineering

Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 4.1 times more return on investment than Tuksu Engineering. However, Solution Advanced is 4.1 times more volatile than Tuksu Engineering ConstructionLtd. It trades about 0.18 of its potential returns per unit of risk. Tuksu Engineering ConstructionLtd is currently generating about 0.06 per unit of risk. If you would invest  130,800  in Solution Advanced Technology on December 27, 2024 and sell it today you would earn a total of  113,700  from holding Solution Advanced Technology or generate 86.93% return on investment over 90 days.

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

Solution Advanced Technology  vs.  Tuksu Engineering Construction

Solution Advanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solution Advanced Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Solution Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Tuksu Engineering

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tuksu Engineering ConstructionLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tuksu Engineering may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Solution Advanced and Tuksu Engineering

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

The idea behind Solution Advanced Technology and Tuksu Engineering ConstructionLtd 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.

Check out your portfolio center.

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.