Correlation Between Associated Industries and Tidehold Development

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

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

Diversification Opportunities for Associated Industries and Tidehold Development

0.05

Correlation Coefficient

Associated Industries  Tidehold Development

Significant diversification

The 3 months correlation between Associated and Tidehold is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Associated Industries China and Tidehold Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidehold Development and Associated Industries 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 Associated Industries China are associated (or correlated) with Tidehold Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidehold Development has no effect on the direction of Associated Industries i.e., Associated Industries and Tidehold Development go up and down completely randomly.

Pair Corralation between Associated Industries and Tidehold Development

Assuming the 90 days trading horizon Associated Industries China is expected to generate 0.69 times more return on investment than Tidehold Development. However, Associated Industries China is 1.44 times less risky than Tidehold Development. It trades about -0.11 of its potential returns per unit of risk. Tidehold Development Co is currently generating about -0.36 per unit of risk. If you would invest  1,230  in Associated Industries China on September 17, 2024 and sell it today you would lose (25.00) from holding Associated Industries China or give up 2.03% of portfolio value over 90 days.

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

Associated Industries China  vs.  Tidehold Development Co

Associated Industries

Risk-Adjusted Performance

0 of 100

Weak

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

Tidehold Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidehold Development Co 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Associated Industries and Tidehold Development

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

The idea behind Associated Industries China and Tidehold Development 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.