Correlation Between Brompton Energy and TECSYS

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

By analyzing existing cross correlation between Brompton Energy Split and TECSYS Inc, you can compare the effects of market volatilities on Brompton Energy and TECSYS 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 Brompton Energy with a short position of TECSYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton Energy and TECSYS.

Diversification Opportunities for Brompton Energy and TECSYS

0.83

Correlation Coefficient

Brompton Energy  TECSYS

Very poor diversification

The 3 months correlation between Brompton and TECSYS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Energy Split and TECSYS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TECSYS Inc and Brompton Energy 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 Brompton Energy Split are associated (or correlated) with TECSYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TECSYS Inc has no effect on the direction of Brompton Energy i.e., Brompton Energy and TECSYS go up and down completely randomly.

Pair Corralation between Brompton Energy and TECSYS

Assuming the 90 days trading horizon Brompton Energy Split is expected to under-perform the TECSYS. In addition to that, Brompton Energy is 1.92 times more volatile than TECSYS Inc. It trades about -0.06 of its total potential returns per unit of risk. TECSYS Inc is currently generating about 0.11 per unit of volatility. If you would invest  4,430  in TECSYS Inc on September 23, 2024 and sell it today you would earn a total of  165.00  from holding TECSYS Inc or generate 3.72% return on investment over 90 days.

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

Brompton Energy Split  vs.  TECSYS Inc

Brompton Energy Split

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Energy Split are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brompton Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

TECSYS Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TECSYS Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TECSYS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brompton Energy and TECSYS

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

The idea behind Brompton Energy Split and TECSYS Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.