Correlation Between TUL and Cayenne Entertainment

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

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

Diversification Opportunities for TUL and Cayenne Entertainment

-0.22

Correlation Coefficient

TUL  Cayenne Entertainment

Very good diversification

The 3 months correlation between TUL and Cayenne is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding TUL Corp. and Cayenne Entertainment Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayenne Entertainment and TUL 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 TUL Corporation are associated (or correlated) with Cayenne Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayenne Entertainment has no effect on the direction of TUL i.e., TUL and Cayenne Entertainment go up and down completely randomly.

Pair Corralation between TUL and Cayenne Entertainment

Assuming the 90 days trading horizon TUL Corporation is expected to generate 0.84 times more return on investment than Cayenne Entertainment. However, TUL Corporation is 1.19 times less risky than Cayenne Entertainment. It trades about 0.02 of its potential returns per unit of risk. Cayenne Entertainment Technology is currently generating about -0.01 per unit of risk. If you would invest  6,980  in TUL Corporation on October 9, 2024 and sell it today you would earn a total of  70.00  from holding TUL Corporation or generate 1.0% return on investment over 90 days.

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

TUL Corp.  vs.  Cayenne Entertainment Technolo

TUL Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TUL Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, TUL is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cayenne Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cayenne Entertainment Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Cayenne Entertainment 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 TUL and Cayenne Entertainment

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

The idea behind TUL Corporation and Cayenne Entertainment Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.