Correlation Between Disney and Tinka Resources

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

By analyzing existing cross correlation between Walt Disney and Tinka Resources Limited, you can compare the effects of market volatilities on Disney and Tinka Resources 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 Disney with a short position of Tinka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Tinka Resources.

Diversification Opportunities for Disney and Tinka Resources

0.64

Correlation Coefficient

Disney  Tinka Resources

Poor diversification

The 3 months correlation between Disney and Tinka is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Tinka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinka Resources and Disney 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 Walt Disney are associated (or correlated) with Tinka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinka Resources has no effect on the direction of Disney i.e., Disney and Tinka Resources go up and down completely randomly.

Pair Corralation between Disney and Tinka Resources

Considering the 90-day investment horizon Walt Disney is expected to generate 0.17 times more return on investment than Tinka Resources. However, Walt Disney is 5.78 times less risky than Tinka Resources. It trades about -0.12 of its potential returns per unit of risk. Tinka Resources Limited is currently generating about -0.04 per unit of risk. If you would invest  11,203  in Walt Disney on December 20, 2024 and sell it today you would lose (1,174) from holding Walt Disney or give up 10.48% of portfolio value over 90 days.

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

Walt Disney  vs.  Tinka Resources Limited

Walt Disney

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Tinka Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tinka Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Disney and Tinka Resources

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

The idea behind Walt Disney and Tinka Resources 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.