Correlation Between Toma As and Prabos Plus

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

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

Diversification Opportunities for Toma As and Prabos Plus

0.04

Correlation Coefficient

Toma As  Prabos Plus

Significant diversification

The 3 months correlation between Toma and Prabos is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Toma as and Prabos Plus as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prabos Plus 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 Prabos Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prabos Plus as has no effect on the direction of Toma As i.e., Toma As and Prabos Plus go up and down completely randomly.

Pair Corralation between Toma As and Prabos Plus

Assuming the 90 days trading horizon Toma as is expected to under-perform the Prabos Plus. But the stock apears to be less risky and, when comparing its historical volatility, Toma as is 1.2 times less risky than Prabos Plus. The stock trades about -0.01 of its potential returns per unit of risk. The Prabos Plus as is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  26,800  in Prabos Plus as on December 30, 2024 and sell it today you would lose (1,200) from holding Prabos Plus as or give up 4.48% of portfolio value over 90 days.

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

Toma as  vs.  Prabos Plus as

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.

Prabos Plus as

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prabos Plus as has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Prabos Plus 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 Prabos Plus

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

The idea behind Toma as and Prabos Plus 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.