Correlation Between SAI Old and TCJH Old

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

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

Diversification Opportunities for SAI Old and TCJH Old

-0.56

Correlation Coefficient

SAI Old  TCJH Old

Excellent diversification

The 3 months correlation between SAI and TCJH is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SAI Old and TCJH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCJH Old and SAI Old 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 SAI Old are associated (or correlated) with TCJH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCJH Old has no effect on the direction of SAI Old i.e., SAI Old and TCJH Old go up and down completely randomly.

Pair Corralation between SAI Old and TCJH Old

Considering the 90-day investment horizon SAI Old is expected to generate 0.91 times more return on investment than TCJH Old. However, SAI Old is 1.09 times less risky than TCJH Old. It trades about 0.08 of its potential returns per unit of risk. TCJH Old is currently generating about 0.05 per unit of risk. If you would invest  88.00  in SAI Old on October 25, 2024 and sell it today you would earn a total of  29.00  from holding SAI Old or generate 32.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

SAI Old  vs.  TCJH Old

SAI Old

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days SAI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, SAI Old demonstrated solid returns over the last few months and may actually be approaching a breakup point.

TCJH Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TCJH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with SAI Old and TCJH Old

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

The idea behind SAI Old and TCJH Old 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.