Correlation Between TOA PAINT and Rich Sport

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

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

Diversification Opportunities for TOA PAINT and Rich Sport

0.5

Correlation Coefficient

TOA PAINT  Rich Sport

Very weak diversification

The 3 months correlation between TOA and Rich is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding TOA PAINT and Rich Sport Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rich Sport Public and TOA PAINT 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 TOA PAINT are associated (or correlated) with Rich Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rich Sport Public has no effect on the direction of TOA PAINT i.e., TOA PAINT and Rich Sport go up and down completely randomly.

Pair Corralation between TOA PAINT and Rich Sport

Assuming the 90 days trading horizon TOA PAINT is expected to under-perform the Rich Sport. In addition to that, TOA PAINT is 3.56 times more volatile than Rich Sport Public. It trades about -0.29 of its total potential returns per unit of risk. Rich Sport Public is currently generating about -0.14 per unit of volatility. If you would invest  193.00  in Rich Sport Public on September 24, 2024 and sell it today you would lose (4.00) from holding Rich Sport Public or give up 2.07% of portfolio value over 90 days.

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

TOA PAINT  vs.  Rich Sport Public

TOA PAINT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOA PAINT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Rich Sport Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rich Sport Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 TOA PAINT and Rich Sport

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

The idea behind TOA PAINT and Rich Sport 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.