Correlation Between TSOGO SUN and Aluminumof China

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

By analyzing existing cross correlation between TSOGO SUN GAMING and Aluminum of, you can compare the effects of market volatilities on TSOGO SUN and Aluminumof China 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 TSOGO SUN with a short position of Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of TSOGO SUN and Aluminumof China.

Diversification Opportunities for TSOGO SUN and Aluminumof China

0.19

Correlation Coefficient

TSOGO SUN  Aluminumof China

Average diversification

The 3 months correlation between TSOGO and Aluminumof is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TSOGO SUN GAMING and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China and TSOGO SUN 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 TSOGO SUN GAMING are associated (or correlated) with Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of TSOGO SUN i.e., TSOGO SUN and Aluminumof China go up and down completely randomly.

Pair Corralation between TSOGO SUN and Aluminumof China

Assuming the 90 days horizon TSOGO SUN GAMING is expected to generate 1.09 times more return on investment than Aluminumof China. However, TSOGO SUN is 1.09 times more volatile than Aluminum of. It trades about -0.03 of its potential returns per unit of risk. Aluminum of is currently generating about -0.12 per unit of risk. If you would invest  46.00  in TSOGO SUN GAMING on November 29, 2024 and sell it today you would lose (1.00) from holding TSOGO SUN GAMING or give up 2.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

TSOGO SUN GAMING  vs.  Aluminum of

TSOGO SUN GAMING

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TSOGO SUN GAMING are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TSOGO SUN reported solid returns over the last few months and may actually be approaching a breakup point.

Aluminumof China

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aluminum of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aluminumof China is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TSOGO SUN and Aluminumof China

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

The idea behind TSOGO SUN GAMING and Aluminum of 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.