Correlation Between TVS Electronics and Styrenix Performance

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

By analyzing existing cross correlation between TVS Electronics Limited and Styrenix Performance Materials, you can compare the effects of market volatilities on TVS Electronics and Styrenix Performance 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 TVS Electronics with a short position of Styrenix Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of TVS Electronics and Styrenix Performance.

Diversification Opportunities for TVS Electronics and Styrenix Performance

0.22

Correlation Coefficient

TVS Electronics  Styrenix Performance

Modest diversification

The 3 months correlation between TVS and Styrenix is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding TVS Electronics Limited and Styrenix Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Styrenix Performance and TVS Electronics 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 TVS Electronics Limited are associated (or correlated) with Styrenix Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Styrenix Performance has no effect on the direction of TVS Electronics i.e., TVS Electronics and Styrenix Performance go up and down completely randomly.

Pair Corralation between TVS Electronics and Styrenix Performance

Assuming the 90 days trading horizon TVS Electronics is expected to generate 16.94 times less return on investment than Styrenix Performance. In addition to that, TVS Electronics is 1.08 times more volatile than Styrenix Performance Materials. It trades about 0.01 of its total potential returns per unit of risk. Styrenix Performance Materials is currently generating about 0.15 per unit of volatility. If you would invest  243,180  in Styrenix Performance Materials on September 30, 2024 and sell it today you would earn a total of  49,925  from holding Styrenix Performance Materials or generate 20.53% return on investment over 90 days.

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

TVS Electronics Limited  vs.  Styrenix Performance Materials

TVS Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Styrenix Performance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Styrenix Performance Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Styrenix Performance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TVS Electronics and Styrenix Performance

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

The idea behind TVS Electronics Limited and Styrenix Performance Materials 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.