Correlation Between Tempo Automation and Methode Electronics

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

Diversification Opportunities for Tempo Automation and Methode Electronics

0.0

Correlation Coefficient

Tempo Automation  Methode Electronics

Pay attention - limited upside

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

Pair Corralation between Tempo Automation and Methode Electronics

If you would invest (100.00) in Tempo Automation Holdings on December 28, 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.  Methode Electronics

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.

Methode Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Methode Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Tempo Automation and Methode Electronics

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

The idea behind Tempo Automation Holdings and Methode Electronics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.