Correlation Between Telecoms Informatics and TDT Investment

Can any of the company-specific risk be diversified away by investing in both Telecoms Informatics and TDT Investment 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 Telecoms Informatics and TDT Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Telecoms Informatics JSC and TDT Investment and, you can compare the effects of market volatilities on Telecoms Informatics and TDT Investment 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 Telecoms Informatics with a short position of TDT Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecoms Informatics and TDT Investment.

Diversification Opportunities for Telecoms Informatics and TDT Investment

0.32

Correlation Coefficient

Telecoms Informatics  TDT Investment

Weak diversification

The 3 months correlation between Telecoms and TDT is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Telecoms Informatics JSC and TDT Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDT Investment and Telecoms Informatics 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 Telecoms Informatics JSC are associated (or correlated) with TDT Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDT Investment has no effect on the direction of Telecoms Informatics i.e., Telecoms Informatics and TDT Investment go up and down completely randomly.

Pair Corralation between Telecoms Informatics and TDT Investment

Assuming the 90 days trading horizon Telecoms Informatics JSC is expected to generate 1.6 times more return on investment than TDT Investment. However, Telecoms Informatics is 1.6 times more volatile than TDT Investment and. It trades about 0.01 of its potential returns per unit of risk. TDT Investment and is currently generating about -0.04 per unit of risk. If you would invest  1,370,000  in Telecoms Informatics JSC on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Telecoms Informatics JSC or generate 0.0% return on investment over 90 days.

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

Telecoms Informatics JSC  vs.  TDT Investment and

Telecoms Informatics JSC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telecoms Informatics JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Telecoms Informatics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

TDT Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days TDT Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TDT Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telecoms Informatics and TDT Investment

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

The idea behind Telecoms Informatics JSC and TDT Investment and 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.