Correlation Between Rafael Microelectronics and TSRC Corp

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

By analyzing existing cross correlation between Rafael Microelectronics and TSRC Corp, you can compare the effects of market volatilities on Rafael Microelectronics and TSRC Corp 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 Rafael Microelectronics with a short position of TSRC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rafael Microelectronics and TSRC Corp.

Diversification Opportunities for Rafael Microelectronics and TSRC Corp

0.64

Correlation Coefficient

Rafael Microelectronics  TSRC Corp

Poor diversification

The 3 months correlation between Rafael and TSRC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Microelectronics and TSRC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSRC Corp and Rafael Microelectronics 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 Rafael Microelectronics are associated (or correlated) with TSRC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSRC Corp has no effect on the direction of Rafael Microelectronics i.e., Rafael Microelectronics and TSRC Corp go up and down completely randomly.

Pair Corralation between Rafael Microelectronics and TSRC Corp

Assuming the 90 days trading horizon Rafael Microelectronics is expected to generate 1.2 times more return on investment than TSRC Corp. However, Rafael Microelectronics is 1.2 times more volatile than TSRC Corp. It trades about -0.05 of its potential returns per unit of risk. TSRC Corp is currently generating about -0.08 per unit of risk. If you would invest  13,500  in Rafael Microelectronics on October 7, 2024 and sell it today you would lose (1,650) from holding Rafael Microelectronics or give up 12.22% of portfolio value over 90 days.

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

Rafael Microelectronics  vs.  TSRC Corp

Rafael Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rafael Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Rafael Microelectronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TSRC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TSRC Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Rafael Microelectronics and TSRC Corp

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

The idea behind Rafael Microelectronics and TSRC Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.