Correlation Between Toma As and Photon Energy

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

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

Diversification Opportunities for Toma As and Photon Energy

0.18

Correlation Coefficient

Toma As  Photon Energy

Average diversification

The 3 months correlation between Toma and Photon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Toma as and Photon Energy NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photon Energy NV 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 Photon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photon Energy NV has no effect on the direction of Toma As i.e., Toma As and Photon Energy go up and down completely randomly.

Pair Corralation between Toma As and Photon Energy

Assuming the 90 days trading horizon Toma as is expected to generate 1.85 times more return on investment than Photon Energy. However, Toma As is 1.85 times more volatile than Photon Energy NV. It trades about -0.01 of its potential returns per unit of risk. Photon Energy NV is currently generating about -0.07 per unit of risk. If you would invest  150,000  in Toma as on December 30, 2024 and sell it today you would lose (7,000) from holding Toma as or give up 4.67% of portfolio value over 90 days.

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

Toma as  vs.  Photon Energy NV

Toma as

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toma as has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Photon Energy NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Photon Energy NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Toma As and Photon Energy

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

The idea behind Toma as and Photon Energy NV 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.