Correlation Between MICRODATA and TGCC SA

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

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

Diversification Opportunities for MICRODATA and TGCC SA

0.89

Correlation Coefficient

MICRODATA  TGCC SA

Very poor diversification

The 3 months correlation between MICRODATA and TGCC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding MICRODATA and TGCC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGCC SA and MICRODATA 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 MICRODATA are associated (or correlated) with TGCC SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGCC SA has no effect on the direction of MICRODATA i.e., MICRODATA and TGCC SA go up and down completely randomly.

Pair Corralation between MICRODATA and TGCC SA

Assuming the 90 days trading horizon MICRODATA is expected to generate 1.94 times less return on investment than TGCC SA. In addition to that, MICRODATA is 1.08 times more volatile than TGCC SA. It trades about 0.11 of its total potential returns per unit of risk. TGCC SA is currently generating about 0.24 per unit of volatility. If you would invest  46,765  in TGCC SA on December 3, 2024 and sell it today you would earn a total of  19,135  from holding TGCC SA or generate 40.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

MICRODATA  vs.  TGCC SA

MICRODATA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MICRODATA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, MICRODATA sustained solid returns over the last few months and may actually be approaching a breakup point.

TGCC SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TGCC SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, TGCC SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MICRODATA and TGCC SA

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

The idea behind MICRODATA and TGCC SA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..