Correlation Between Tantalus Systems and Legrand SA

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

By analyzing existing cross correlation between Tantalus Systems Holding and Legrand SA, you can compare the effects of market volatilities on Tantalus Systems and Legrand SA 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 Tantalus Systems with a short position of Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tantalus Systems and Legrand SA.

Diversification Opportunities for Tantalus Systems and Legrand SA

-0.66

Correlation Coefficient

Tantalus Systems  Legrand SA

Excellent diversification

The 3 months correlation between Tantalus and Legrand is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tantalus Systems Holding and Legrand SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA and Tantalus Systems 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 Tantalus Systems Holding are associated (or correlated) with Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA has no effect on the direction of Tantalus Systems i.e., Tantalus Systems and Legrand SA go up and down completely randomly.

Pair Corralation between Tantalus Systems and Legrand SA

Assuming the 90 days horizon Tantalus Systems is expected to generate 11.32 times less return on investment than Legrand SA. But when comparing it to its historical volatility, Tantalus Systems Holding is 1.09 times less risky than Legrand SA. It trades about 0.01 of its potential returns per unit of risk. Legrand SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9,950  in Legrand SA on December 2, 2024 and sell it today you would earn a total of  1,723  from holding Legrand SA or generate 17.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.94%
Values	Daily Returns

Tantalus Systems Holding  vs.  Legrand SA

Tantalus Systems Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tantalus Systems Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Tantalus Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Legrand SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Legrand SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Legrand SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tantalus Systems and Legrand SA

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

The idea behind Tantalus Systems Holding and Legrand SA 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.