Correlation Between Perma-Fix Environmental and TT Electronics

Can any of the company-specific risk be diversified away by investing in both Perma-Fix Environmental and TT Electronics 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 Perma-Fix Environmental and TT Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perma Fix Environmental Services and TT Electronics PLC, you can compare the effects of market volatilities on Perma-Fix Environmental and TT Electronics 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 Perma-Fix Environmental with a short position of TT Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma-Fix Environmental and TT Electronics.

Diversification Opportunities for Perma-Fix Environmental and TT Electronics

-0.35

Correlation Coefficient

Perma-Fix Environmental  TT Electronics

Very good diversification

The 3 months correlation between Perma-Fix and 7TT is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic and TT Electronics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TT Electronics PLC and Perma-Fix Environmental 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 Perma Fix Environmental Services are associated (or correlated) with TT Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TT Electronics PLC has no effect on the direction of Perma-Fix Environmental i.e., Perma-Fix Environmental and TT Electronics go up and down completely randomly.

Pair Corralation between Perma-Fix Environmental and TT Electronics

Assuming the 90 days trading horizon Perma Fix Environmental Services is expected to generate 0.91 times more return on investment than TT Electronics. However, Perma Fix Environmental Services is 1.1 times less risky than TT Electronics. It trades about 0.06 of its potential returns per unit of risk. TT Electronics PLC is currently generating about -0.03 per unit of risk. If you would invest  840.00  in Perma Fix Environmental Services on September 29, 2024 and sell it today you would earn a total of  220.00  from holding Perma Fix Environmental Services or generate 26.19% return on investment over 90 days.

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

Perma Fix Environmental Servic  vs.  TT Electronics PLC

Perma Fix Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perma Fix Environmental Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Perma-Fix Environmental is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

TT Electronics PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TT Electronics PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TT Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perma-Fix Environmental and TT Electronics

The main advantage of trading using opposite Perma-Fix Environmental and TT Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma-Fix Environmental position performs unexpectedly, TT Electronics 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 TT Electronics will offset losses from the drop in TT Electronics' long position.

The idea behind Perma Fix Environmental Services and TT Electronics PLC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.