Correlation Between Trio Tech and Tractor Supply

Can any of the company-specific risk be diversified away by investing in both Trio Tech and Tractor Supply 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 Tractor Supply 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 Tractor Supply, you can compare the effects of market volatilities on Trio Tech and Tractor Supply 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 Tractor Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trio Tech and Tractor Supply.

Diversification Opportunities for Trio Tech and Tractor Supply

-0.21

Correlation Coefficient

Trio Tech  Tractor Supply

Very good diversification

The 3 months correlation between Trio and Tractor is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and Tractor Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tractor Supply 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 Tractor Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tractor Supply has no effect on the direction of Trio Tech i.e., Trio Tech and Tractor Supply go up and down completely randomly.

Pair Corralation between Trio Tech and Tractor Supply

Considering the 90-day investment horizon Trio Tech International is expected to generate 1.11 times more return on investment than Tractor Supply. However, Trio Tech is 1.11 times more volatile than Tractor Supply. It trades about 0.02 of its potential returns per unit of risk. Tractor Supply is currently generating about 0.0 per unit of risk. If you would invest  621.00  in Trio Tech International on December 24, 2024 and sell it today you would earn a total of  11.00  from holding Trio Tech International or generate 1.77% return on investment over 90 days.

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

Trio Tech International  vs.  Tractor Supply

Trio Tech International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Tech International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Trio Tech is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Tractor Supply

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tractor Supply has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Tractor Supply is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Trio Tech and Tractor Supply

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

The idea behind Trio Tech International and Tractor Supply 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.