Correlation Between Cable One and TRX Renda

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

By analyzing existing cross correlation between Cable One and TRX Renda Fundo, you can compare the effects of market volatilities on Cable One and TRX Renda 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 Cable One with a short position of TRX Renda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and TRX Renda.

Diversification Opportunities for Cable One and TRX Renda

0.0

Correlation Coefficient

Cable One  TRX Renda

Pay attention - limited upside

The 3 months correlation between Cable and TRX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and TRX Renda Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Renda Fundo and Cable One 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 Cable One are associated (or correlated) with TRX Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Renda Fundo has no effect on the direction of Cable One i.e., Cable One and TRX Renda go up and down completely randomly.

Pair Corralation between Cable One and TRX Renda

If you would invest (100.00) in TRX Renda Fundo on October 15, 2024 and sell it today you would earn a total of  100.00  from holding TRX Renda Fundo or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cable One  vs.  TRX Renda Fundo

Cable One

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cable One sustained solid returns over the last few months and may actually be approaching a breakup point.

TRX Renda Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRX Renda Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, TRX Renda is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cable One and TRX Renda

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

The idea behind Cable One and TRX Renda Fundo 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.