Correlation Between TRON and FLAT CAPITAL

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

By analyzing existing cross correlation between TRON and FLAT CAPITAL AB, you can compare the effects of market volatilities on TRON and FLAT 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 TRON with a short position of FLAT CAPITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and FLAT CAPITAL.

Diversification Opportunities for TRON and FLAT CAPITAL

0.3

Correlation Coefficient

TRON  FLAT CAPITAL

Weak diversification

The 3 months correlation between TRON and FLAT is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding TRON and FLAT CAPITAL AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLAT CAPITAL AB and TRON 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 TRON are associated (or correlated) with FLAT CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLAT CAPITAL AB has no effect on the direction of TRON i.e., TRON and FLAT CAPITAL go up and down completely randomly.

Pair Corralation between TRON and FLAT CAPITAL

Assuming the 90 days trading horizon TRON is expected to generate 2.52 times more return on investment than FLAT CAPITAL. However, TRON is 2.52 times more volatile than FLAT CAPITAL AB. It trades about 0.09 of its potential returns per unit of risk. FLAT CAPITAL AB is currently generating about 0.05 per unit of risk. If you would invest  16.00  in TRON on October 10, 2024 and sell it today you would earn a total of  9.00  from holding TRON or generate 56.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

TRON  vs.  FLAT CAPITAL AB

TRON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

FLAT CAPITAL AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FLAT CAPITAL AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, FLAT CAPITAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRON and FLAT CAPITAL

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

The idea behind TRON and FLAT CAPITAL AB 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.