Correlation Between CTCI Corp and TCI

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

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

Diversification Opportunities for CTCI Corp and TCI

0.68

Correlation Coefficient

CTCI Corp  TCI

Poor diversification

The 3 months correlation between CTCI and TCI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and TCI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCI Co and CTCI Corp 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 CTCI Corp are associated (or correlated) with TCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCI Co has no effect on the direction of CTCI Corp i.e., CTCI Corp and TCI go up and down completely randomly.

Pair Corralation between CTCI Corp and TCI

Assuming the 90 days trading horizon CTCI Corp is expected to under-perform the TCI. But the stock apears to be less risky and, when comparing its historical volatility, CTCI Corp is 1.56 times less risky than TCI. The stock trades about -0.36 of its potential returns per unit of risk. The TCI Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  13,300  in TCI Co on September 16, 2024 and sell it today you would lose (900.00) from holding TCI Co or give up 6.77% of portfolio value over 90 days.

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

CTCI Corp  vs.  TCI Co

CTCI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTCI Corp 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.

TCI Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TCI Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with CTCI Corp and TCI

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

The idea behind CTCI Corp and TCI 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.