Correlation Between GE Aerospace and Tat Techno

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

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

Diversification Opportunities for GE Aerospace and Tat Techno

-0.75

Correlation Coefficient

GE Aerospace  Tat Techno

Pay attention - limited upside

The 3 months correlation between GE Aerospace and Tat is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Tat Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tat Techno and GE Aerospace 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 GE Aerospace are associated (or correlated) with Tat Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tat Techno has no effect on the direction of GE Aerospace i.e., GE Aerospace and Tat Techno go up and down completely randomly.

Pair Corralation between GE Aerospace and Tat Techno

Allowing for the 90-day total investment horizon GE Aerospace is expected to under-perform the Tat Techno. But the stock apears to be less risky and, when comparing its historical volatility, GE Aerospace is 1.6 times less risky than Tat Techno. The stock trades about -0.16 of its potential returns per unit of risk. The Tat Techno is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,223  in Tat Techno on September 23, 2024 and sell it today you would earn a total of  377.00  from holding Tat Techno or generate 16.96% return on investment over 90 days.

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

GE Aerospace  vs.  Tat Techno

GE Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Tat Techno

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tat Techno are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Tat Techno unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GE Aerospace and Tat Techno

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

The idea behind GE Aerospace and Tat Techno 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.