Correlation Between TT Electronics and NO GRAVITY

Can any of the company-specific risk be diversified away by investing in both TT Electronics and NO GRAVITY 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 TT Electronics and NO GRAVITY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TT Electronics PLC and NO GRAVITY GAMES, you can compare the effects of market volatilities on TT Electronics and NO GRAVITY 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 TT Electronics with a short position of NO GRAVITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and NO GRAVITY.

Diversification Opportunities for TT Electronics and NO GRAVITY

-0.32

Correlation Coefficient

TT Electronics  NO GRAVITY

Very good diversification

The 3 months correlation between 7TT and 8YX is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and NO GRAVITY GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NO GRAVITY GAMES and TT 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 TT Electronics PLC are associated (or correlated) with NO GRAVITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NO GRAVITY GAMES has no effect on the direction of TT Electronics i.e., TT Electronics and NO GRAVITY go up and down completely randomly.

Pair Corralation between TT Electronics and NO GRAVITY

Assuming the 90 days trading horizon TT Electronics is expected to generate 1.02 times less return on investment than NO GRAVITY. But when comparing it to its historical volatility, TT Electronics PLC is 2.43 times less risky than NO GRAVITY. It trades about 0.08 of its potential returns per unit of risk. NO GRAVITY GAMES is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.20  in NO GRAVITY GAMES on February 7, 2024 and sell it today you would earn a total of  0.06  from holding NO GRAVITY GAMES or generate 5.0% return on investment over 90 days.

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

TT Electronics PLC  vs.  NO GRAVITY GAMES

TT Electronics PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TT Electronics PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TT Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

NO GRAVITY GAMES

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NO GRAVITY GAMES are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NO GRAVITY reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TT Electronics and NO GRAVITY

The main advantage of trading using opposite TT Electronics and NO GRAVITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics position performs unexpectedly, NO GRAVITY 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 NO GRAVITY will offset losses from the drop in NO GRAVITY's long position.

The idea behind TT Electronics PLC and NO GRAVITY GAMES 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..