Correlation Between Blue Coast and Tamilnadu Telecommunicatio

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

By analyzing existing cross correlation between Blue Coast Hotels and Tamilnadu Telecommunication Limited, you can compare the effects of market volatilities on Blue Coast and Tamilnadu Telecommunicatio 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 Blue Coast with a short position of Tamilnadu Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Coast and Tamilnadu Telecommunicatio.

Diversification Opportunities for Blue Coast and Tamilnadu Telecommunicatio

0.49

Correlation Coefficient

Blue Coast  Tamilnadu Telecommunicatio

Very weak diversification

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

Pair Corralation between Blue Coast and Tamilnadu Telecommunicatio

Assuming the 90 days trading horizon Blue Coast Hotels is expected to generate 0.7 times more return on investment than Tamilnadu Telecommunicatio. However, Blue Coast Hotels is 1.43 times less risky than Tamilnadu Telecommunicatio. It trades about 0.09 of its potential returns per unit of risk. Tamilnadu Telecommunication Limited is currently generating about 0.05 per unit of risk. If you would invest  730.00  in Blue Coast Hotels on September 26, 2024 and sell it today you would earn a total of  627.00  from holding Blue Coast Hotels or generate 85.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.9%
Values	Daily Returns

Blue Coast Hotels  vs.  Tamilnadu Telecommunication Li

Blue Coast Hotels

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Coast Hotels are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Blue Coast sustained solid returns over the last few months and may actually be approaching a breakup point.

Tamilnadu Telecommunicatio

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tamilnadu Telecommunication Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Tamilnadu Telecommunicatio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Coast and Tamilnadu Telecommunicatio

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

The idea behind Blue Coast Hotels and Tamilnadu Telecommunication Limited 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.