Correlation Between TeraGo and ROYAL CANADIAN

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

By analyzing existing cross correlation between TeraGo Inc and ROYAL CANADIAN MINT, you can compare the effects of market volatilities on TeraGo and ROYAL CANADIAN 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 TeraGo with a short position of ROYAL CANADIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of TeraGo and ROYAL CANADIAN.

Diversification Opportunities for TeraGo and ROYAL CANADIAN

0.19

Correlation Coefficient

TeraGo  ROYAL CANADIAN

Average diversification

The 3 months correlation between TeraGo and ROYAL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TeraGo Inc and ROYAL CANADIAN MINT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROYAL CANADIAN MINT and TeraGo 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 TeraGo Inc are associated (or correlated) with ROYAL CANADIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROYAL CANADIAN MINT has no effect on the direction of TeraGo i.e., TeraGo and ROYAL CANADIAN go up and down completely randomly.

Pair Corralation between TeraGo and ROYAL CANADIAN

Assuming the 90 days trading horizon TeraGo Inc is expected to under-perform the ROYAL CANADIAN. In addition to that, TeraGo is 2.89 times more volatile than ROYAL CANADIAN MINT. It trades about -0.06 of its total potential returns per unit of risk. ROYAL CANADIAN MINT is currently generating about 0.24 per unit of volatility. If you would invest  2,744  in ROYAL CANADIAN MINT on December 27, 2024 and sell it today you would earn a total of  546.00  from holding ROYAL CANADIAN MINT or generate 19.9% return on investment over 90 days.

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

TeraGo Inc  vs.  ROYAL CANADIAN MINT

TeraGo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TeraGo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ROYAL CANADIAN MINT

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ROYAL CANADIAN MINT are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, ROYAL CANADIAN unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TeraGo and ROYAL CANADIAN

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

The idea behind TeraGo Inc and ROYAL CANADIAN MINT 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.