Correlation Between Tempo Automation and Deswell Industries

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

By analyzing existing cross correlation between Tempo Automation Holdings and Deswell Industries, you can compare the effects of market volatilities on Tempo Automation and Deswell Industries 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 Tempo Automation with a short position of Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempo Automation and Deswell Industries.

Diversification Opportunities for Tempo Automation and Deswell Industries

0.0

Correlation Coefficient

Tempo Automation  Deswell Industries

Pay attention - limited upside

The 3 months correlation between Tempo and Deswell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tempo Automation Holdings and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries and Tempo Automation 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 Tempo Automation Holdings are associated (or correlated) with Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of Tempo Automation i.e., Tempo Automation and Deswell Industries go up and down completely randomly.

Pair Corralation between Tempo Automation and Deswell Industries

If you would invest (100.00) in Tempo Automation Holdings on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Tempo Automation Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Tempo Automation Holdings  vs.  Deswell Industries

Tempo Automation Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tempo Automation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tempo Automation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Deswell Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deswell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Tempo Automation and Deswell Industries

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

The idea behind Tempo Automation Holdings and Deswell Industries 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.