Correlation Between President Bakery and TQM Public

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

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

Diversification Opportunities for President Bakery and TQM Public

-0.39

Correlation Coefficient

President Bakery  TQM Public

Very good diversification

The 3 months correlation between President and TQM is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding President Bakery Public and TQM Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TQM Public and President Bakery 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 President Bakery Public are associated (or correlated) with TQM Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TQM Public has no effect on the direction of President Bakery i.e., President Bakery and TQM Public go up and down completely randomly.

Pair Corralation between President Bakery and TQM Public

Assuming the 90 days horizon President Bakery Public is expected to generate 0.34 times more return on investment than TQM Public. However, President Bakery Public is 2.97 times less risky than TQM Public. It trades about -0.08 of its potential returns per unit of risk. TQM Public is currently generating about -0.04 per unit of risk. If you would invest  6,906  in President Bakery Public on September 24, 2024 and sell it today you would lose (1,006) from holding President Bakery Public or give up 14.57% of portfolio value over 90 days.

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

President Bakery Public  vs.  TQM Public

President Bakery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Bakery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, President Bakery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

TQM Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TQM Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with President Bakery and TQM Public

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

The idea behind President Bakery Public and TQM Public 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.