Correlation Between TCI and BizLink Holding

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

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

Diversification Opportunities for TCI and BizLink Holding

0.03

Correlation Coefficient

TCI  BizLink Holding

Significant diversification

The 3 months correlation between TCI and BizLink is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding TCI Co and BizLink Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BizLink Holding 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 BizLink Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BizLink Holding has no effect on the direction of TCI i.e., TCI and BizLink Holding go up and down completely randomly.

Pair Corralation between TCI and BizLink Holding

Assuming the 90 days trading horizon TCI Co is expected to generate 0.66 times more return on investment than BizLink Holding. However, TCI Co is 1.53 times less risky than BizLink Holding. It trades about 0.12 of its potential returns per unit of risk. BizLink Holding is currently generating about -0.09 per unit of risk. If you would invest  12,550  in TCI Co on December 5, 2024 and sell it today you would earn a total of  1,950  from holding TCI Co or generate 15.54% return on investment over 90 days.

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

TCI Co  vs.  BizLink Holding

TCI Co

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TCI Co are ranked lower than 9 (%) 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.

BizLink Holding

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TCI and BizLink Holding

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

The idea behind TCI Co and BizLink Holding 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.