Correlation Between Tier1 Technology and Indexa Capital

Can any of the company-specific risk be diversified away by investing in both Tier1 Technology and Indexa Capital 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 Tier1 Technology and Indexa Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tier1 Technology SA and Indexa Capital Group,, you can compare the effects of market volatilities on Tier1 Technology and Indexa Capital 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 Tier1 Technology with a short position of Indexa Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tier1 Technology and Indexa Capital.

Diversification Opportunities for Tier1 Technology and Indexa Capital

-0.45

Correlation Coefficient

Tier1 Technology  Indexa Capital

Very good diversification

The 3 months correlation between Tier1 and Indexa is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tier1 Technology SA and Indexa Capital Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indexa Capital Group, and Tier1 Technology 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 Tier1 Technology SA are associated (or correlated) with Indexa Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indexa Capital Group, has no effect on the direction of Tier1 Technology i.e., Tier1 Technology and Indexa Capital go up and down completely randomly.

Pair Corralation between Tier1 Technology and Indexa Capital

Assuming the 90 days trading horizon Tier1 Technology SA is expected to generate 0.33 times more return on investment than Indexa Capital. However, Tier1 Technology SA is 3.06 times less risky than Indexa Capital. It trades about 0.39 of its potential returns per unit of risk. Indexa Capital Group, is currently generating about -0.51 per unit of risk. If you would invest  292.00  in Tier1 Technology SA on September 16, 2024 and sell it today you would earn a total of  6.00  from holding Tier1 Technology SA or generate 2.05% return on investment over 90 days.

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

Tier1 Technology SA  vs.  Indexa Capital Group,

Tier1 Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tier1 Technology SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Tier1 Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Indexa Capital Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indexa Capital Group, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tier1 Technology and Indexa Capital

The main advantage of trading using opposite Tier1 Technology and Indexa Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tier1 Technology position performs unexpectedly, Indexa Capital 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 Indexa Capital will offset losses from the drop in Indexa Capital's long position.

The idea behind Tier1 Technology SA and Indexa Capital Group, 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.