Correlation Between TCI and StShine Optical

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

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

Diversification Opportunities for TCI and StShine Optical

0.34

Correlation Coefficient

TCI  StShine Optical

Weak diversification

The 3 months correlation between TCI and StShine is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding TCI Co and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical and TCI 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 TCI Co are associated (or correlated) with StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of TCI i.e., TCI and StShine Optical go up and down completely randomly.

Pair Corralation between TCI and StShine Optical

Assuming the 90 days trading horizon TCI Co is expected to generate 1.98 times more return on investment than StShine Optical. However, TCI is 1.98 times more volatile than StShine Optical Co. It trades about 0.16 of its potential returns per unit of risk. StShine Optical Co is currently generating about -0.04 per unit of risk. If you would invest  12,300  in TCI Co on December 29, 2024 and sell it today you would earn a total of  2,700  from holding TCI Co or generate 21.95% return on investment over 90 days.

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

TCI Co  vs.  StShine Optical Co

TCI Co

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TCI Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TCI showed solid returns over the last few months and may actually be approaching a breakup point.

StShine Optical

Risk-Adjusted Performance

Very Weak

Over the last 90 days StShine Optical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, StShine Optical 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 TCI and StShine Optical

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

The idea behind TCI Co and StShine Optical Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.