Correlation Between TRON and Lara Exploration

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

By analyzing existing cross correlation between TRON and Lara Exploration, you can compare the effects of market volatilities on TRON and Lara Exploration 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 Lara Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and Lara Exploration.

Diversification Opportunities for TRON and Lara Exploration

-0.43

Correlation Coefficient

TRON  Lara Exploration

Very good diversification

The 3 months correlation between TRON and Lara is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Lara Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lara Exploration 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 Lara Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lara Exploration has no effect on the direction of TRON i.e., TRON and Lara Exploration go up and down completely randomly.

Pair Corralation between TRON and Lara Exploration

Assuming the 90 days trading horizon TRON is expected to under-perform the Lara Exploration. In addition to that, TRON is 1.22 times more volatile than Lara Exploration. It trades about -0.02 of its total potential returns per unit of risk. Lara Exploration is currently generating about 0.28 per unit of volatility. If you would invest  90.00  in Lara Exploration on October 25, 2024 and sell it today you would earn a total of  17.00  from holding Lara Exploration or generate 18.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

TRON  vs.  Lara Exploration

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.

Lara Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lara Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lara Exploration is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRON and Lara Exploration

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

The idea behind TRON and Lara Exploration 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.