Correlation Between Trustcash Holdings and Sparta Commercial

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

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

Diversification Opportunities for Trustcash Holdings and Sparta Commercial

0.69

Correlation Coefficient

Trustcash Holdings  Sparta Commercial

Poor diversification

The 3 months correlation between Trustcash and Sparta is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Trustcash Holdings and Sparta Commercial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Commercial and Trustcash Holdings 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 Trustcash Holdings are associated (or correlated) with Sparta Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Commercial has no effect on the direction of Trustcash Holdings i.e., Trustcash Holdings and Sparta Commercial go up and down completely randomly.

Pair Corralation between Trustcash Holdings and Sparta Commercial

Given the investment horizon of 90 days Trustcash Holdings is expected to under-perform the Sparta Commercial. In addition to that, Trustcash Holdings is 1.57 times more volatile than Sparta Commercial Services. It trades about -0.13 of its total potential returns per unit of risk. Sparta Commercial Services is currently generating about -0.01 per unit of volatility. If you would invest  34.00  in Sparta Commercial Services on September 2, 2024 and sell it today you would lose (8.00) from holding Sparta Commercial Services or give up 23.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Trustcash Holdings  vs.  Sparta Commercial Services

Trustcash Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trustcash Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Sparta Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Commercial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Sparta Commercial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Trustcash Holdings and Sparta Commercial

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

The idea behind Trustcash Holdings and Sparta Commercial Services 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..