Correlation Between Global Tech and TOMI Environmental

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

By analyzing existing cross correlation between Global Tech Industries and TOMI Environmental Solutions, you can compare the effects of market volatilities on Global Tech and TOMI Environmental 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 Global Tech with a short position of TOMI Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Tech and TOMI Environmental.

Diversification Opportunities for Global Tech and TOMI Environmental

-0.62

Correlation Coefficient

Global Tech  TOMI Environmental

Excellent diversification

The 3 months correlation between Global and TOMI is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Global Tech Industries and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental and Global Tech 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 Global Tech Industries are associated (or correlated) with TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of Global Tech i.e., Global Tech and TOMI Environmental go up and down completely randomly.

Pair Corralation between Global Tech and TOMI Environmental

Given the investment horizon of 90 days Global Tech Industries is expected to generate 10.47 times more return on investment than TOMI Environmental. However, Global Tech is 10.47 times more volatile than TOMI Environmental Solutions. It trades about 0.23 of its potential returns per unit of risk. TOMI Environmental Solutions is currently generating about -0.06 per unit of risk. If you would invest  3.00  in Global Tech Industries on December 27, 2024 and sell it today you would earn a total of  13.00  from holding Global Tech Industries or generate 433.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Global Tech Industries  vs.  TOMI Environmental Solutions

Global Tech Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Tech Industries are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Global Tech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

TOMI Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOMI Environmental Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Global Tech and TOMI Environmental

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

The idea behind Global Tech Industries and TOMI Environmental Solutions 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.