Correlation Between Evolution and TANGIAMO TOUCH

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

By analyzing existing cross correlation between Evolution AB and TANGIAMO TOUCH TECHN, you can compare the effects of market volatilities on Evolution and TANGIAMO TOUCH 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 Evolution with a short position of TANGIAMO TOUCH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and TANGIAMO TOUCH.

Diversification Opportunities for Evolution and TANGIAMO TOUCH

0.44

Correlation Coefficient

Evolution  TANGIAMO TOUCH

Very weak diversification

The 3 months correlation between Evolution and TANGIAMO is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and TANGIAMO TOUCH TECHN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TANGIAMO TOUCH TECHN and Evolution 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 Evolution AB are associated (or correlated) with TANGIAMO TOUCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TANGIAMO TOUCH TECHN has no effect on the direction of Evolution i.e., Evolution and TANGIAMO TOUCH go up and down completely randomly.

Pair Corralation between Evolution and TANGIAMO TOUCH

Assuming the 90 days trading horizon Evolution AB is expected to under-perform the TANGIAMO TOUCH. But the stock apears to be less risky and, when comparing its historical volatility, Evolution AB is 18.56 times less risky than TANGIAMO TOUCH. The stock trades about -0.08 of its potential returns per unit of risk. The TANGIAMO TOUCH TECHN is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  20.00  in TANGIAMO TOUCH TECHN on September 25, 2024 and sell it today you would lose (7.00) from holding TANGIAMO TOUCH TECHN or give up 35.0% of portfolio value over 90 days.

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

Evolution AB  vs.  TANGIAMO TOUCH TECHN

Evolution AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

TANGIAMO TOUCH TECHN

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Evolution and TANGIAMO TOUCH

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

The idea behind Evolution AB and TANGIAMO TOUCH TECHN 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..