Correlation Between Toma As and Energoaqua

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

By analyzing existing cross correlation between Toma as and Energoaqua as, you can compare the effects of market volatilities on Toma As and Energoaqua 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 Toma As with a short position of Energoaqua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toma As and Energoaqua.

Diversification Opportunities for Toma As and Energoaqua

0.01

Correlation Coefficient

Toma As  Energoaqua

Significant diversification

The 3 months correlation between Toma and Energoaqua is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Toma as and Energoaqua as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energoaqua as and Toma As 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 Toma as are associated (or correlated) with Energoaqua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energoaqua as has no effect on the direction of Toma As i.e., Toma As and Energoaqua go up and down completely randomly.

Pair Corralation between Toma As and Energoaqua

Assuming the 90 days trading horizon Toma As is expected to generate 1.16 times less return on investment than Energoaqua. But when comparing it to its historical volatility, Toma as is 1.64 times less risky than Energoaqua. It trades about 0.07 of its potential returns per unit of risk. Energoaqua as is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  286,000  in Energoaqua as on August 30, 2024 and sell it today you would earn a total of  14,000  from holding Energoaqua as or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Toma as  vs.  Energoaqua as

Toma as

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Toma as are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Toma As is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Energoaqua as

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energoaqua as are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Energoaqua is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Toma As and Energoaqua

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

The idea behind Toma as and Energoaqua as 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.