Correlation Between SILEON AB and TT Electronics

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

By analyzing existing cross correlation between SILEON AB ON and TT Electronics PLC, you can compare the effects of market volatilities on SILEON AB and TT Electronics 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 SILEON AB with a short position of TT Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SILEON AB and TT Electronics.

Diversification Opportunities for SILEON AB and TT Electronics

0.14

Correlation Coefficient

SILEON AB  TT Electronics

Average diversification

The 3 months correlation between SILEON and 7TT is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SILEON AB ON and TT Electronics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TT Electronics PLC and SILEON AB 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 SILEON AB ON are associated (or correlated) with TT Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TT Electronics PLC has no effect on the direction of SILEON AB i.e., SILEON AB and TT Electronics go up and down completely randomly.

Pair Corralation between SILEON AB and TT Electronics

Assuming the 90 days trading horizon SILEON AB ON is expected to generate 9.64 times more return on investment than TT Electronics. However, SILEON AB is 9.64 times more volatile than TT Electronics PLC. It trades about 0.02 of its potential returns per unit of risk. TT Electronics PLC is currently generating about -0.18 per unit of risk. If you would invest  49.00  in SILEON AB ON on December 21, 2024 and sell it today you would lose (25.00) from holding SILEON AB ON or give up 51.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

SILEON AB ON  vs.  TT Electronics PLC

SILEON AB ON

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SILEON AB ON are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, SILEON AB reported solid returns over the last few months and may actually be approaching a breakup point.

TT Electronics PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days TT Electronics PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SILEON AB and TT Electronics

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

The idea behind SILEON AB ON and TT Electronics PLC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.