Correlation Between Flagship Investments and Torque Metals

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

By analyzing existing cross correlation between Flagship Investments and Torque Metals, you can compare the effects of market volatilities on Flagship Investments and Torque Metals 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 Flagship Investments with a short position of Torque Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Torque Metals.

Diversification Opportunities for Flagship Investments and Torque Metals

0.33

Correlation Coefficient

Flagship Investments  Torque Metals

Weak diversification

The 3 months correlation between Flagship and Torque is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Torque Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torque Metals and Flagship Investments 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 Flagship Investments are associated (or correlated) with Torque Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torque Metals has no effect on the direction of Flagship Investments i.e., Flagship Investments and Torque Metals go up and down completely randomly.

Pair Corralation between Flagship Investments and Torque Metals

Assuming the 90 days trading horizon Flagship Investments is expected to under-perform the Torque Metals. But the stock apears to be less risky and, when comparing its historical volatility, Flagship Investments is 3.54 times less risky than Torque Metals. The stock trades about -0.02 of its potential returns per unit of risk. The Torque Metals is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5.20  in Torque Metals on December 22, 2024 and sell it today you would earn a total of  4.80  from holding Torque Metals or generate 92.31% return on investment over 90 days.

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

Flagship Investments  vs.  Torque Metals

Flagship Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flagship Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Flagship Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Torque Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Torque Metals are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Torque Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flagship Investments and Torque Metals

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

The idea behind Flagship Investments and Torque Metals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.