Correlation Between Gloria Material and TMP Steel

Can any of the company-specific risk be diversified away by investing in both Gloria Material and TMP Steel 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 Gloria Material and TMP Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Gloria Material and TMP Steel

-0.4

Correlation Coefficient

Gloria Material  TMP Steel

Very good diversification

The 3 months correlation between Gloria and TMP is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gloria Material Technology and TMP Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMP Steel and Gloria Material 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 Gloria Material Technology are associated (or correlated) with TMP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMP Steel has no effect on the direction of Gloria Material i.e., Gloria Material and TMP Steel go up and down completely randomly.

Pair Corralation between Gloria Material and TMP Steel

Assuming the 90 days trading horizon Gloria Material Technology is expected to generate 0.9 times more return on investment than TMP Steel. However, Gloria Material Technology is 1.11 times less risky than TMP Steel. It trades about 0.03 of its potential returns per unit of risk. TMP Steel is currently generating about -0.09 per unit of risk. If you would invest  4,620  in Gloria Material Technology on September 4, 2024 and sell it today you would earn a total of  100.00  from holding Gloria Material Technology or generate 2.16% return on investment over 90 days.

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

Gloria Material Technology  vs.  TMP Steel

Gloria Material Tech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gloria Material Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Gloria Material is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TMP Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMP Steel 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.

Pair Trading with Gloria Material and TMP Steel

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

The idea behind Gloria Material Technology and TMP Steel 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.