Correlation Between Techno Medical and SAF Special

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

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

Diversification Opportunities for Techno Medical and SAF Special

0.86

Correlation Coefficient

Techno Medical  SAF Special

Very poor diversification

The 3 months correlation between Techno and SAF is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Techno Medical Public and SAF Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAF Special Steel and Techno Medical 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 Techno Medical Public are associated (or correlated) with SAF Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAF Special Steel has no effect on the direction of Techno Medical i.e., Techno Medical and SAF Special go up and down completely randomly.

Pair Corralation between Techno Medical and SAF Special

Assuming the 90 days horizon Techno Medical Public is expected to generate 19.68 times more return on investment than SAF Special. However, Techno Medical is 19.68 times more volatile than SAF Special Steel. It trades about 0.06 of its potential returns per unit of risk. SAF Special Steel is currently generating about -0.04 per unit of risk. If you would invest  188.00  in Techno Medical Public on October 12, 2024 and sell it today you would lose (91.00) from holding Techno Medical Public or give up 48.4% of portfolio value over 90 days.

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

Techno Medical Public  vs.  SAF Special Steel

Techno Medical Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techno Medical 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 fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SAF Special Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAF Special Steel 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Techno Medical and SAF Special

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

The idea behind Techno Medical Public and SAF Special Steel 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.