Correlation Between TMC Industrial and Sena Development

Can any of the company-specific risk be diversified away by investing in both TMC Industrial and Sena Development 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 Sena Development 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 Sena Development Public, you can compare the effects of market volatilities on TMC Industrial and Sena Development 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 Sena Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMC Industrial and Sena Development.

Diversification Opportunities for TMC Industrial and Sena Development

0.91

Correlation Coefficient

TMC Industrial  Sena Development

Almost no diversification

The 3 months correlation between TMC and Sena is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding TMC Industrial Public and Sena Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sena Development Public 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 Sena Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sena Development Public has no effect on the direction of TMC Industrial i.e., TMC Industrial and Sena Development go up and down completely randomly.

Pair Corralation between TMC Industrial and Sena Development

Assuming the 90 days trading horizon TMC Industrial Public is expected to under-perform the Sena Development. In addition to that, TMC Industrial is 4.48 times more volatile than Sena Development Public. It trades about -0.24 of its total potential returns per unit of risk. Sena Development Public is currently generating about -0.22 per unit of volatility. If you would invest  226.00  in Sena Development Public on October 26, 2024 and sell it today you would lose (6.00) from holding Sena Development Public or give up 2.65% of portfolio value over 90 days.

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

TMC Industrial Public  vs.  Sena Development Public

TMC Industrial Public

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sena Development Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sena Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sena Development is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TMC Industrial and Sena Development

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

The idea behind TMC Industrial Public and Sena Development Public 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.