Correlation Between TMC Industrial and AIM Industrial

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

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

Diversification Opportunities for TMC Industrial and AIM Industrial

-0.68

Correlation Coefficient

TMC Industrial  AIM Industrial

Excellent diversification

The 3 months correlation between TMC and AIM is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding TMC Industrial Public and AIM Industrial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Industrial Growth and TMC Industrial 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 TMC Industrial Public are associated (or correlated) with AIM Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Industrial Growth has no effect on the direction of TMC Industrial i.e., TMC Industrial and AIM Industrial go up and down completely randomly.

Pair Corralation between TMC Industrial and AIM Industrial

Assuming the 90 days trading horizon TMC Industrial Public is expected to under-perform the AIM Industrial. In addition to that, TMC Industrial is 3.73 times more volatile than AIM Industrial Growth. It trades about -0.17 of its total potential returns per unit of risk. AIM Industrial Growth is currently generating about 0.05 per unit of volatility. If you would invest  1,039  in AIM Industrial Growth on December 28, 2024 and sell it today you would earn a total of  21.00  from holding AIM Industrial Growth or generate 2.02% return on investment over 90 days.

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

TMC Industrial Public  vs.  AIM Industrial Growth

TMC Industrial Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TMC Industrial Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

AIM Industrial Growth

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AIM Industrial Growth are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, AIM Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TMC Industrial and AIM Industrial

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

The idea behind TMC Industrial Public and AIM Industrial Growth 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.