Correlation Between Take Two and Transocean

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

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

Diversification Opportunities for Take Two and Transocean

0.12

Correlation Coefficient

Take Two  Transocean

Average diversification

The 3 months correlation between Take and Transocean is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean and Take Two 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 Take Two Interactive Software are associated (or correlated) with Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Take Two i.e., Take Two and Transocean go up and down completely randomly.

Pair Corralation between Take Two and Transocean

Assuming the 90 days trading horizon Take Two Interactive Software is expected to under-perform the Transocean. But the stock apears to be less risky and, when comparing its historical volatility, Take Two Interactive Software is 1.89 times less risky than Transocean. The stock trades about -0.06 of its potential returns per unit of risk. The Transocean is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,440  in Transocean on October 14, 2024 and sell it today you would lose (11.00) from holding Transocean or give up 0.45% of portfolio value over 90 days.

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

Take Two Interactive Software  vs.  Transocean

Take Two Interactive

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Take Two sustained solid returns over the last few months and may actually be approaching a breakup point.

Transocean

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transocean are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Transocean may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Take Two and Transocean

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

The idea behind Take Two Interactive Software and Transocean 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.