Correlation Between TCM Public and Steel Public

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

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

Diversification Opportunities for TCM Public and Steel Public

0.43

Correlation Coefficient

TCM Public  Steel Public

Very weak diversification

The 3 months correlation between TCM and Steel is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding TCM Public and The Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Public and TCM 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 TCM Public are associated (or correlated) with Steel Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Public has no effect on the direction of TCM Public i.e., TCM Public and Steel Public go up and down completely randomly.

Pair Corralation between TCM Public and Steel Public

Assuming the 90 days trading horizon TCM Public is expected to under-perform the Steel Public. In addition to that, TCM Public is 1.64 times more volatile than The Steel Public. It trades about -0.09 of its total potential returns per unit of risk. The Steel Public is currently generating about -0.06 per unit of volatility. If you would invest  76.00  in The Steel Public on December 28, 2024 and sell it today you would lose (10.00) from holding The Steel Public or give up 13.16% of portfolio value over 90 days.

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

TCM Public  vs.  The Steel Public

TCM Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TCM Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Steel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with TCM Public and Steel Public

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

The idea behind TCM Public and The Steel Public 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.