Correlation Between TBI Motion and Strong H

Can any of the company-specific risk be diversified away by investing in both TBI Motion and Strong H 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 TBI Motion and Strong H into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TBI Motion Technology and Strong H Machinery, you can compare the effects of market volatilities on TBI Motion and Strong H 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 TBI Motion with a short position of Strong H. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBI Motion and Strong H.

Diversification Opportunities for TBI Motion and Strong H

0.31

Correlation Coefficient

TBI Motion  Strong H

Weak diversification

The 3 months correlation between TBI and Strong is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding TBI Motion Technology and Strong H Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strong H Machinery and TBI Motion 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 TBI Motion Technology are associated (or correlated) with Strong H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strong H Machinery has no effect on the direction of TBI Motion i.e., TBI Motion and Strong H go up and down completely randomly.

Pair Corralation between TBI Motion and Strong H

Assuming the 90 days trading horizon TBI Motion Technology is expected to generate 3.74 times more return on investment than Strong H. However, TBI Motion is 3.74 times more volatile than Strong H Machinery. It trades about 0.16 of its potential returns per unit of risk. Strong H Machinery is currently generating about 0.09 per unit of risk. If you would invest  3,940  in TBI Motion Technology on December 4, 2024 and sell it today you would earn a total of  1,610  from holding TBI Motion Technology or generate 40.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

TBI Motion Technology  vs.  Strong H Machinery

TBI Motion Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TBI Motion Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TBI Motion showed solid returns over the last few months and may actually be approaching a breakup point.

Strong H Machinery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strong H Machinery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Strong H may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TBI Motion and Strong H

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

The idea behind TBI Motion Technology and Strong H Machinery 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..