Correlation Between TANGIAMO TOUCH and Evolution

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

By analyzing existing cross correlation between TANGIAMO TOUCH TECHN and Evolution AB, you can compare the effects of market volatilities on TANGIAMO TOUCH and Evolution 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 TANGIAMO TOUCH with a short position of Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of TANGIAMO TOUCH and Evolution.

Diversification Opportunities for TANGIAMO TOUCH and Evolution

0.38

Correlation Coefficient

TANGIAMO TOUCH  Evolution

Weak diversification

The 3 months correlation between TANGIAMO and Evolution is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding TANGIAMO TOUCH TECHN and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB and TANGIAMO TOUCH 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 TANGIAMO TOUCH TECHN are associated (or correlated) with Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of TANGIAMO TOUCH i.e., TANGIAMO TOUCH and Evolution go up and down completely randomly.

Pair Corralation between TANGIAMO TOUCH and Evolution

Assuming the 90 days horizon TANGIAMO TOUCH TECHN is expected to generate 31.71 times more return on investment than Evolution. However, TANGIAMO TOUCH is 31.71 times more volatile than Evolution AB. It trades about 0.18 of its potential returns per unit of risk. Evolution AB is currently generating about -0.1 per unit of risk. If you would invest  60.00  in TANGIAMO TOUCH TECHN on October 3, 2024 and sell it today you would lose (48.00) from holding TANGIAMO TOUCH TECHN or give up 80.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

TANGIAMO TOUCH TECHN  vs.  Evolution AB

TANGIAMO TOUCH TECHN

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TANGIAMO TOUCH TECHN are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TANGIAMO TOUCH reported solid returns over the last few months and may actually be approaching a breakup point.

Evolution AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TANGIAMO TOUCH and Evolution

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

The idea behind TANGIAMO TOUCH TECHN and Evolution AB 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.