Correlation Between Zomato and Thomas Scott

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

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

Diversification Opportunities for Zomato and Thomas Scott

-0.17

Correlation Coefficient

Zomato  Thomas Scott

Good diversification

The 3 months correlation between Zomato and Thomas is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Zomato Limited and Thomas Scott Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomas Scott Limited and Zomato 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 Zomato Limited are associated (or correlated) with Thomas Scott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomas Scott Limited has no effect on the direction of Zomato i.e., Zomato and Thomas Scott go up and down completely randomly.

Pair Corralation between Zomato and Thomas Scott

Assuming the 90 days trading horizon Zomato Limited is expected to under-perform the Thomas Scott. But the stock apears to be less risky and, when comparing its historical volatility, Zomato Limited is 1.03 times less risky than Thomas Scott. The stock trades about -0.15 of its potential returns per unit of risk. The Thomas Scott Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  32,400  in Thomas Scott Limited on December 11, 2024 and sell it today you would lose (65.00) from holding Thomas Scott Limited or give up 0.2% of portfolio value over 90 days.

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

Zomato Limited  vs.  Thomas Scott Limited

Zomato Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zomato Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thomas Scott Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thomas Scott Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Thomas Scott is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zomato and Thomas Scott

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

The idea behind Zomato Limited and Thomas Scott Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.