Correlation Between Team Precision and TKS Technologies

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

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

Diversification Opportunities for Team Precision and TKS Technologies

0.4

Correlation Coefficient

Team Precision  TKS Technologies

Very weak diversification

The 3 months correlation between Team and TKS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Team Precision Public and TKS Technologies Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKS Technologies Public and Team Precision 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 Team Precision Public are associated (or correlated) with TKS Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKS Technologies Public has no effect on the direction of Team Precision i.e., Team Precision and TKS Technologies go up and down completely randomly.

Pair Corralation between Team Precision and TKS Technologies

Assuming the 90 days trading horizon Team Precision Public is expected to generate 1.61 times more return on investment than TKS Technologies. However, Team Precision is 1.61 times more volatile than TKS Technologies Public. It trades about 0.08 of its potential returns per unit of risk. TKS Technologies Public is currently generating about -0.04 per unit of risk. If you would invest  251.00  in Team Precision Public on December 28, 2024 and sell it today you would earn a total of  27.00  from holding Team Precision Public or generate 10.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Team Precision Public  vs.  TKS Technologies Public

Team Precision Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Team Precision Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Team Precision may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TKS Technologies Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TKS Technologies Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, TKS Technologies 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 Team Precision and TKS Technologies

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

The idea behind Team Precision Public and TKS Technologies 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.