Correlation Between SERI INDUSTRIAL and TRAINLINE PLC

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

By analyzing existing cross correlation between SERI INDUSTRIAL EO and TRAINLINE PLC LS, you can compare the effects of market volatilities on SERI INDUSTRIAL and TRAINLINE PLC 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 SERI INDUSTRIAL with a short position of TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and TRAINLINE PLC.

Diversification Opportunities for SERI INDUSTRIAL and TRAINLINE PLC

-0.37

Correlation Coefficient

SERI INDUSTRIAL  TRAINLINE PLC

Very good diversification

The 3 months correlation between SERI and TRAINLINE is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and TRAINLINE PLC go up and down completely randomly.

Pair Corralation between SERI INDUSTRIAL and TRAINLINE PLC

Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the TRAINLINE PLC. In addition to that, SERI INDUSTRIAL is 1.48 times more volatile than TRAINLINE PLC LS. It trades about -0.29 of its total potential returns per unit of risk. TRAINLINE PLC LS is currently generating about 0.13 per unit of volatility. If you would invest  482.00  in TRAINLINE PLC LS on October 4, 2024 and sell it today you would earn a total of  18.00  from holding TRAINLINE PLC LS or generate 3.73% return on investment over 90 days.

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

SERI INDUSTRIAL EO  vs.  TRAINLINE PLC LS

SERI INDUSTRIAL EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

TRAINLINE PLC LS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAINLINE PLC LS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAINLINE PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SERI INDUSTRIAL and TRAINLINE PLC

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

The idea behind SERI INDUSTRIAL EO and TRAINLINE PLC LS 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.