Correlation Between ThinTech Materials and Good Finance

Can any of the company-specific risk be diversified away by investing in both ThinTech Materials and Good Finance 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 ThinTech Materials and Good Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ThinTech Materials Technology and Good Finance Securities, you can compare the effects of market volatilities on ThinTech Materials and Good Finance 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 ThinTech Materials with a short position of Good Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ThinTech Materials and Good Finance.

Diversification Opportunities for ThinTech Materials and Good Finance

0.58

Correlation Coefficient

ThinTech Materials  Good Finance

Very weak diversification

The 3 months correlation between ThinTech and Good is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ThinTech Materials Technology and Good Finance Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Finance Securities and ThinTech Materials 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 ThinTech Materials Technology are associated (or correlated) with Good Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Finance Securities has no effect on the direction of ThinTech Materials i.e., ThinTech Materials and Good Finance go up and down completely randomly.

Pair Corralation between ThinTech Materials and Good Finance

Assuming the 90 days trading horizon ThinTech Materials Technology is expected to under-perform the Good Finance. In addition to that, ThinTech Materials is 3.01 times more volatile than Good Finance Securities. It trades about -0.07 of its total potential returns per unit of risk. Good Finance Securities is currently generating about -0.05 per unit of volatility. If you would invest  2,405  in Good Finance Securities on October 10, 2024 and sell it today you would lose (30.00) from holding Good Finance Securities or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

ThinTech Materials Technology  vs.  Good Finance Securities

ThinTech Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ThinTech Materials Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Good Finance Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Good Finance Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Good Finance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ThinTech Materials and Good Finance

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

The idea behind ThinTech Materials Technology and Good Finance Securities 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.