Correlation Between Trio Tech and HeadsUp Entertainment

Can any of the company-specific risk be diversified away by investing in both Trio Tech and HeadsUp Entertainment 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 Trio Tech and HeadsUp Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trio Tech International and HeadsUp Entertainment International, you can compare the effects of market volatilities on Trio Tech and HeadsUp Entertainment 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 Trio Tech with a short position of HeadsUp Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trio Tech and HeadsUp Entertainment.

Diversification Opportunities for Trio Tech and HeadsUp Entertainment

-0.56

Correlation Coefficient

Trio Tech  HeadsUp Entertainment

Excellent diversification

The 3 months correlation between Trio and HeadsUp is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and HeadsUp Entertainment Internat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeadsUp Entertainment and Trio Tech 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 Trio Tech International are associated (or correlated) with HeadsUp Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeadsUp Entertainment has no effect on the direction of Trio Tech i.e., Trio Tech and HeadsUp Entertainment go up and down completely randomly.

Pair Corralation between Trio Tech and HeadsUp Entertainment

Considering the 90-day investment horizon Trio Tech International is expected to under-perform the HeadsUp Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Trio Tech International is 2.59 times less risky than HeadsUp Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The HeadsUp Entertainment International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.57  in HeadsUp Entertainment International on September 23, 2024 and sell it today you would earn a total of  0.09  from holding HeadsUp Entertainment International or generate 15.79% return on investment over 90 days.

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

Trio Tech International  vs.  HeadsUp Entertainment Internat

Trio Tech International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Tech International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Trio Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

HeadsUp Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HeadsUp Entertainment International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Trio Tech and HeadsUp Entertainment

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

The idea behind Trio Tech International and HeadsUp Entertainment International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.