Correlation Between TT Electronics and ANSYS

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

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

Diversification Opportunities for TT Electronics and ANSYS

0.49

Correlation Coefficient

TT Electronics  ANSYS

Very weak diversification

The 3 months correlation between 7TT and ANSYS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and ANSYS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANSYS Inc and TT Electronics 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 TT Electronics PLC are associated (or correlated) with ANSYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANSYS Inc has no effect on the direction of TT Electronics i.e., TT Electronics and ANSYS go up and down completely randomly.

Pair Corralation between TT Electronics and ANSYS

Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the ANSYS. In addition to that, TT Electronics is 2.16 times more volatile than ANSYS Inc. It trades about -0.58 of its total potential returns per unit of risk. ANSYS Inc is currently generating about 0.24 per unit of volatility. If you would invest  32,510  in ANSYS Inc on October 25, 2024 and sell it today you would earn a total of  1,150  from holding ANSYS Inc or generate 3.54% return on investment over 90 days.

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

TT Electronics PLC  vs.  ANSYS Inc

TT Electronics PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TT Electronics PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TT Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ANSYS Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ANSYS Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ANSYS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TT Electronics and ANSYS

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

The idea behind TT Electronics PLC and ANSYS Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..