Correlation Between Valhi and Trio Tech

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

By analyzing existing cross correlation between Valhi Inc and Trio Tech International, you can compare the effects of market volatilities on Valhi and Trio Tech 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 Valhi with a short position of Trio Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valhi and Trio Tech.

Diversification Opportunities for Valhi and Trio Tech

0.53

Correlation Coefficient

Valhi  Trio Tech

Very weak diversification

The 3 months correlation between Valhi and Trio is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Valhi Inc and Trio Tech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Tech International and Valhi 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 Valhi Inc are associated (or correlated) with Trio Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Tech International has no effect on the direction of Valhi i.e., Valhi and Trio Tech go up and down completely randomly.

Pair Corralation between Valhi and Trio Tech

Considering the 90-day investment horizon Valhi Inc is expected to under-perform the Trio Tech. In addition to that, Valhi is 1.61 times more volatile than Trio Tech International. It trades about -0.09 of its total potential returns per unit of risk. Trio Tech International is currently generating about -0.06 per unit of volatility. If you would invest  680.00  in Trio Tech International on October 25, 2024 and sell it today you would lose (83.00) from holding Trio Tech International or give up 12.21% of portfolio value over 90 days.

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

Valhi Inc  vs.  Trio Tech International

Valhi Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valhi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Trio Tech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trio Tech International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Valhi and Trio Tech

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

The idea behind Valhi Inc and Trio Tech International 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.