Correlation Between Canoo Holdings and TMST Old

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

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

Diversification Opportunities for Canoo Holdings and TMST Old

0.0

Correlation Coefficient

Canoo Holdings  TMST Old

Pay attention - limited upside

The 3 months correlation between Canoo and TMST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Holdings and TMST Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMST Old and Canoo Holdings 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 Canoo Holdings are associated (or correlated) with TMST Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMST Old has no effect on the direction of Canoo Holdings i.e., Canoo Holdings and TMST Old go up and down completely randomly.

Pair Corralation between Canoo Holdings and TMST Old

If you would invest  10.00  in Canoo Holdings on December 2, 2024 and sell it today you would lose (9.49) from holding Canoo Holdings or give up 94.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Canoo Holdings  vs.  TMST Old

Canoo Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canoo Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Canoo Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TMST Old

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Canoo Holdings and TMST Old

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

The idea behind Canoo Holdings and TMST Old 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.