Correlation Between TVI Pacific and Critical Elements

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

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

Diversification Opportunities for TVI Pacific and Critical Elements

-0.66

Correlation Coefficient

TVI Pacific  Critical Elements

Excellent diversification

The 3 months correlation between TVI and Critical is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding TVI Pacific and Critical Elements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Elements and TVI Pacific 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 TVI Pacific are associated (or correlated) with Critical Elements. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Elements has no effect on the direction of TVI Pacific i.e., TVI Pacific and Critical Elements go up and down completely randomly.

Pair Corralation between TVI Pacific and Critical Elements

Assuming the 90 days horizon TVI Pacific is expected to generate 20.03 times more return on investment than Critical Elements. However, TVI Pacific is 20.03 times more volatile than Critical Elements. It trades about 0.12 of its potential returns per unit of risk. Critical Elements is currently generating about -0.02 per unit of risk. If you would invest  1.50  in TVI Pacific on October 7, 2024 and sell it today you would earn a total of  4.49  from holding TVI Pacific or generate 299.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

TVI Pacific  vs.  Critical Elements

TVI Pacific

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TVI Pacific are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TVI Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Critical Elements

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Critical Elements has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TVI Pacific and Critical Elements

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

The idea behind TVI Pacific and Critical Elements 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.