Correlation Between TTCL Public and TMT Steel

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

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

Diversification Opportunities for TTCL Public and TMT Steel

0.92

Correlation Coefficient

TTCL Public  TMT Steel

Almost no diversification

The 3 months correlation between TTCL and TMT is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding TTCL Public and TMT Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Steel Public and TTCL Public 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 TTCL Public are associated (or correlated) with TMT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Steel Public has no effect on the direction of TTCL Public i.e., TTCL Public and TMT Steel go up and down completely randomly.

Pair Corralation between TTCL Public and TMT Steel

Assuming the 90 days trading horizon TTCL Public is expected to generate 1.01 times less return on investment than TMT Steel. But when comparing it to its historical volatility, TTCL Public is 1.0 times less risky than TMT Steel. It trades about 0.12 of its potential returns per unit of risk. TMT Steel Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.00  in TMT Steel Public on September 3, 2024 and sell it today you would earn a total of  328.00  from holding TMT Steel Public or generate 9.223372036854776E16% return on investment over 90 days.

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

TTCL Public  vs.  TMT Steel Public

TTCL Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TTCL Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, TTCL Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

TMT Steel Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TMT Steel Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, TMT Steel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TTCL Public and TMT Steel

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

The idea behind TTCL Public and TMT Steel Public 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.