Correlation Between Triad Group and London Stock

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

By analyzing existing cross correlation between Triad Group PLC and London Stock Exchange, you can compare the effects of market volatilities on Triad Group and London Stock 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 Triad Group with a short position of London Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triad Group and London Stock.

Diversification Opportunities for Triad Group and London Stock

-0.17

Correlation Coefficient

Triad Group  London Stock

Good diversification

The 3 months correlation between Triad and London is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group PLC and London Stock Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Stock Exchange and Triad Group 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 Triad Group PLC are associated (or correlated) with London Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Stock Exchange has no effect on the direction of Triad Group i.e., Triad Group and London Stock go up and down completely randomly.

Pair Corralation between Triad Group and London Stock

Assuming the 90 days trading horizon Triad Group PLC is expected to under-perform the London Stock. But the stock apears to be less risky and, when comparing its historical volatility, Triad Group PLC is 1.14 times less risky than London Stock. The stock trades about -0.42 of its potential returns per unit of risk. The London Stock Exchange is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,143,500  in London Stock Exchange on October 6, 2024 and sell it today you would lose (1,500) from holding London Stock Exchange or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Triad Group PLC  vs.  London Stock Exchange

Triad Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triad Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

London Stock Exchange

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in London Stock Exchange are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, London Stock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Triad Group and London Stock

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

The idea behind Triad Group PLC and London Stock Exchange 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.