Correlation Between Tarku Resources and CHAR Technologies

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

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

Diversification Opportunities for Tarku Resources and CHAR Technologies

0.35

Correlation Coefficient

Tarku Resources  CHAR Technologies

Weak diversification

The 3 months correlation between Tarku and CHAR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tarku Resources and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies and Tarku Resources 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 Tarku Resources are associated (or correlated) with CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Tarku Resources i.e., Tarku Resources and CHAR Technologies go up and down completely randomly.

Pair Corralation between Tarku Resources and CHAR Technologies

Assuming the 90 days horizon Tarku Resources is expected to generate 4.01 times more return on investment than CHAR Technologies. However, Tarku Resources is 4.01 times more volatile than CHAR Technologies. It trades about 0.06 of its potential returns per unit of risk. CHAR Technologies is currently generating about -0.11 per unit of risk. If you would invest  1.50  in Tarku Resources on October 22, 2024 and sell it today you would lose (0.50) from holding Tarku Resources or give up 33.33% of portfolio value over 90 days.

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

Tarku Resources  vs.  CHAR Technologies

Tarku Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tarku Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Tarku Resources showed solid returns over the last few months and may actually be approaching a breakup point.

CHAR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Tarku Resources and CHAR Technologies

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

The idea behind Tarku Resources and CHAR Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.