Correlation Between SVI Public and Teka Construction

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

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

Diversification Opportunities for SVI Public and Teka Construction

0.52

Correlation Coefficient

SVI Public  Teka Construction

Very weak diversification

The 3 months correlation between SVI and Teka is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SVI Public and Teka Construction PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teka Construction PCL and SVI Public 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 SVI Public are associated (or correlated) with Teka Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teka Construction PCL has no effect on the direction of SVI Public i.e., SVI Public and Teka Construction go up and down completely randomly.

Pair Corralation between SVI Public and Teka Construction

Assuming the 90 days trading horizon SVI Public is expected to under-perform the Teka Construction. In addition to that, SVI Public is 1.87 times more volatile than Teka Construction PCL. It trades about -0.07 of its total potential returns per unit of risk. Teka Construction PCL is currently generating about -0.03 per unit of volatility. If you would invest  226.00  in Teka Construction PCL on September 13, 2024 and sell it today you would lose (4.00) from holding Teka Construction PCL or give up 1.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

SVI Public  vs.  Teka Construction PCL

SVI Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Teka Construction PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teka Construction PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Teka Construction is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SVI Public and Teka Construction

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

The idea behind SVI Public and Teka Construction PCL 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.