Correlation Between CHAR Technologies and Timbercreek Financial

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

By analyzing existing cross correlation between CHAR Technologies and Timbercreek Financial Corp, you can compare the effects of market volatilities on CHAR Technologies and Timbercreek Financial 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 CHAR Technologies with a short position of Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAR Technologies and Timbercreek Financial.

Diversification Opportunities for CHAR Technologies and Timbercreek Financial

0.08

Correlation Coefficient

CHAR Technologies  Timbercreek Financial

Significant diversification

The 3 months correlation between CHAR and Timbercreek is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CHAR Technologies and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial and CHAR Technologies 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 CHAR Technologies are associated (or correlated) with Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of CHAR Technologies i.e., CHAR Technologies and Timbercreek Financial go up and down completely randomly.

Pair Corralation between CHAR Technologies and Timbercreek Financial

Assuming the 90 days horizon CHAR Technologies is expected to under-perform the Timbercreek Financial. In addition to that, CHAR Technologies is 4.42 times more volatile than Timbercreek Financial Corp. It trades about -0.18 of its total potential returns per unit of risk. Timbercreek Financial Corp is currently generating about -0.18 per unit of volatility. If you would invest  700.00  in Timbercreek Financial Corp on December 1, 2024 and sell it today you would lose (30.00) from holding Timbercreek Financial Corp or give up 4.29% of portfolio value over 90 days.

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

CHAR Technologies  vs.  Timbercreek Financial Corp

CHAR Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CHAR Technologies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Timbercreek Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timbercreek Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CHAR Technologies and Timbercreek Financial

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

The idea behind CHAR Technologies and Timbercreek Financial Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.