Correlation Between TRON and HIMARK

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

By analyzing existing cross correlation between TRON and HIMARK 145 10 MAY 26, you can compare the effects of market volatilities on TRON and HIMARK 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 HIMARK. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and HIMARK.

Diversification Opportunities for TRON and HIMARK

-0.5

Correlation Coefficient

TRON  HIMARK

Very good diversification

The 3 months correlation between TRON and HIMARK is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding TRON and HIMARK 145 10 MAY 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIMARK 145 10 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 HIMARK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIMARK 145 10 has no effect on the direction of TRON i.e., TRON and HIMARK go up and down completely randomly.

Pair Corralation between TRON and HIMARK

Assuming the 90 days trading horizon TRON is expected to under-perform the HIMARK. In addition to that, TRON is 13.54 times more volatile than HIMARK 145 10 MAY 26. It trades about -0.02 of its total potential returns per unit of risk. HIMARK 145 10 MAY 26 is currently generating about -0.04 per unit of volatility. If you would invest  9,472  in HIMARK 145 10 MAY 26 on December 22, 2024 and sell it today you would lose (26.00) from holding HIMARK 145 10 MAY 26 or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	42.19%
Values	Daily Returns

TRON  vs.  HIMARK 145 10 MAY 26

TRON

Risk-Adjusted Performance

Very Weak

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

HIMARK 145 10

Risk-Adjusted Performance

Very Weak

Over the last 90 days HIMARK 145 10 MAY 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HIMARK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TRON and HIMARK

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

The idea behind TRON and HIMARK 145 10 MAY 26 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.