Correlation Between TKS Technologies and Com7 PCL

Can any of the company-specific risk be diversified away by investing in both TKS Technologies and Com7 PCL 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 TKS Technologies and Com7 PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TKS Technologies Public and Com7 PCL, you can compare the effects of market volatilities on TKS Technologies and Com7 PCL 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 TKS Technologies with a short position of Com7 PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKS Technologies and Com7 PCL.

Diversification Opportunities for TKS Technologies and Com7 PCL

-0.72

Correlation Coefficient

TKS Technologies  Com7 PCL

Pay attention - limited upside

The 3 months correlation between TKS and Com7 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding TKS Technologies Public and Com7 PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Com7 PCL and TKS Technologies 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 TKS Technologies Public are associated (or correlated) with Com7 PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Com7 PCL has no effect on the direction of TKS Technologies i.e., TKS Technologies and Com7 PCL go up and down completely randomly.

Pair Corralation between TKS Technologies and Com7 PCL

Assuming the 90 days trading horizon TKS Technologies Public is expected to under-perform the Com7 PCL. But the stock apears to be less risky and, when comparing its historical volatility, TKS Technologies Public is 2.14 times less risky than Com7 PCL. The stock trades about -0.31 of its potential returns per unit of risk. The Com7 PCL is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,750  in Com7 PCL on September 12, 2024 and sell it today you would lose (25.00) from holding Com7 PCL or give up 0.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

TKS Technologies Public  vs.  Com7 PCL

TKS Technologies Public

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Com7 PCL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Com7 PCL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Com7 PCL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TKS Technologies and Com7 PCL

The main advantage of trading using opposite TKS Technologies and Com7 PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKS Technologies position performs unexpectedly, Com7 PCL 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 Com7 PCL will offset losses from the drop in Com7 PCL's long position.

The idea behind TKS Technologies Public and Com7 PCL 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.