Correlation Between Com7 PCL and Techno Medical

Can any of the company-specific risk be diversified away by investing in both Com7 PCL and Techno Medical 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 Com7 PCL and Techno Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Com7 PCL and Techno Medical Public, you can compare the effects of market volatilities on Com7 PCL and Techno Medical 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 Com7 PCL with a short position of Techno Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Com7 PCL and Techno Medical.

Diversification Opportunities for Com7 PCL and Techno Medical

-0.55

Correlation Coefficient

Com7 PCL  Techno Medical

Excellent diversification

The 3 months correlation between Com7 and Techno is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Com7 PCL and Techno Medical Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techno Medical Public and Com7 PCL 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 Com7 PCL are associated (or correlated) with Techno Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techno Medical Public has no effect on the direction of Com7 PCL i.e., Com7 PCL and Techno Medical go up and down completely randomly.

Pair Corralation between Com7 PCL and Techno Medical

Assuming the 90 days trading horizon Com7 PCL is expected to under-perform the Techno Medical. But the stock apears to be less risky and, when comparing its historical volatility, Com7 PCL is 19.7 times less risky than Techno Medical. The stock trades about -0.01 of its potential returns per unit of risk. The Techno Medical Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  260.00  in Techno Medical Public on October 4, 2024 and sell it today you would lose (161.00) from holding Techno Medical Public or give up 61.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Com7 PCL  vs.  Techno Medical Public

Com7 PCL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Com7 PCL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Com7 PCL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Techno Medical Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techno Medical Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Com7 PCL and Techno Medical

The main advantage of trading using opposite Com7 PCL and Techno Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Com7 PCL position performs unexpectedly, Techno Medical 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 Techno Medical will offset losses from the drop in Techno Medical's long position.

The idea behind Com7 PCL and Techno Medical Public 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.