Correlation Between TRANS NATIONWIDE and SECURE ELECTRONIC

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

By analyzing existing cross correlation between TRANS NATIONWIDE EXPRESS PLC and SECURE ELECTRONIC TECHNOLOGY, you can compare the effects of market volatilities on TRANS NATIONWIDE and SECURE ELECTRONIC 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 TRANS NATIONWIDE with a short position of SECURE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRANS NATIONWIDE and SECURE ELECTRONIC.

Diversification Opportunities for TRANS NATIONWIDE and SECURE ELECTRONIC

-0.36

Correlation Coefficient

TRANS NATIONWIDE  SECURE ELECTRONIC

Very good diversification

The 3 months correlation between TRANS and SECURE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding TRANS NATIONWIDE EXPRESS PLC and SECURE ELECTRONIC TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURE ELECTRONIC and TRANS NATIONWIDE 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 TRANS NATIONWIDE EXPRESS PLC are associated (or correlated) with SECURE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECURE ELECTRONIC has no effect on the direction of TRANS NATIONWIDE i.e., TRANS NATIONWIDE and SECURE ELECTRONIC go up and down completely randomly.

Pair Corralation between TRANS NATIONWIDE and SECURE ELECTRONIC

Assuming the 90 days trading horizon TRANS NATIONWIDE EXPRESS PLC is expected to generate 0.4 times more return on investment than SECURE ELECTRONIC. However, TRANS NATIONWIDE EXPRESS PLC is 2.51 times less risky than SECURE ELECTRONIC. It trades about 0.27 of its potential returns per unit of risk. SECURE ELECTRONIC TECHNOLOGY is currently generating about 0.06 per unit of risk. If you would invest  123.00  in TRANS NATIONWIDE EXPRESS PLC on September 28, 2024 and sell it today you would earn a total of  15.00  from holding TRANS NATIONWIDE EXPRESS PLC or generate 12.2% return on investment over 90 days.

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

TRANS NATIONWIDE EXPRESS PLC  vs.  SECURE ELECTRONIC TECHNOLOGY

TRANS NATIONWIDE EXP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRANS NATIONWIDE EXPRESS PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, TRANS NATIONWIDE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SECURE ELECTRONIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SECURE ELECTRONIC TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with TRANS NATIONWIDE and SECURE ELECTRONIC

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

The idea behind TRANS NATIONWIDE EXPRESS PLC and SECURE ELECTRONIC TECHNOLOGY 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.