Correlation Between VARIOUS EATERIES and THRACE PLASTICS

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

By analyzing existing cross correlation between VARIOUS EATERIES LS and THRACE PLASTICS, you can compare the effects of market volatilities on VARIOUS EATERIES and THRACE PLASTICS 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 VARIOUS EATERIES with a short position of THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and THRACE PLASTICS.

Diversification Opportunities for VARIOUS EATERIES and THRACE PLASTICS

-0.16

Correlation Coefficient

VARIOUS EATERIES  THRACE PLASTICS

Good diversification

The 3 months correlation between VARIOUS and THRACE is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS and VARIOUS EATERIES 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 VARIOUS EATERIES LS are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of VARIOUS EATERIES i.e., VARIOUS EATERIES and THRACE PLASTICS go up and down completely randomly.

Pair Corralation between VARIOUS EATERIES and THRACE PLASTICS

Assuming the 90 days horizon VARIOUS EATERIES LS is expected to under-perform the THRACE PLASTICS. In addition to that, VARIOUS EATERIES is 1.48 times more volatile than THRACE PLASTICS. It trades about -0.04 of its total potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.02 per unit of volatility. If you would invest  356.00  in THRACE PLASTICS on September 20, 2024 and sell it today you would earn a total of  37.00  from holding THRACE PLASTICS or generate 10.39% return on investment over 90 days.

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

VARIOUS EATERIES LS  vs.  THRACE PLASTICS

VARIOUS EATERIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VARIOUS EATERIES LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

THRACE PLASTICS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, THRACE PLASTICS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VARIOUS EATERIES and THRACE PLASTICS

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

The idea behind VARIOUS EATERIES LS and THRACE PLASTICS 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.