Correlation Between Optical Cable and Telesat Corp

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

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

Diversification Opportunities for Optical Cable and Telesat Corp

-0.03

Correlation Coefficient

Optical Cable  Telesat Corp

Good diversification

The 3 months correlation between Optical and Telesat is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Optical Cable and Telesat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telesat Corp and Optical Cable 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 Optical Cable are associated (or correlated) with Telesat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telesat Corp has no effect on the direction of Optical Cable i.e., Optical Cable and Telesat Corp go up and down completely randomly.

Pair Corralation between Optical Cable and Telesat Corp

Considering the 90-day investment horizon Optical Cable is expected to under-perform the Telesat Corp. But the stock apears to be less risky and, when comparing its historical volatility, Optical Cable is 1.94 times less risky than Telesat Corp. The stock trades about -0.1 of its potential returns per unit of risk. The Telesat Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,027  in Telesat Corp on September 3, 2024 and sell it today you would earn a total of  319.00  from holding Telesat Corp or generate 31.06% return on investment over 90 days.

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

Optical Cable  vs.  Telesat Corp

Optical Cable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optical Cable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Telesat Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telesat Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Telesat Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optical Cable and Telesat Corp

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

The idea behind Optical Cable and Telesat Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.