Correlation Between TF Bank and Filo Mining

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

By analyzing existing cross correlation between TF Bank AB and Filo Mining Corp, you can compare the effects of market volatilities on TF Bank and Filo Mining 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 TF Bank with a short position of Filo Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of TF Bank and Filo Mining.

Diversification Opportunities for TF Bank and Filo Mining

0.73

Correlation Coefficient

TF Bank  Filo Mining

Poor diversification

The 3 months correlation between TFBANK and Filo is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding TF Bank AB and Filo Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filo Mining Corp and TF Bank 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 TF Bank AB are associated (or correlated) with Filo Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filo Mining Corp has no effect on the direction of TF Bank i.e., TF Bank and Filo Mining go up and down completely randomly.

Pair Corralation between TF Bank and Filo Mining

Assuming the 90 days trading horizon TF Bank AB is expected to generate 0.7 times more return on investment than Filo Mining. However, TF Bank AB is 1.42 times less risky than Filo Mining. It trades about 0.19 of its potential returns per unit of risk. Filo Mining Corp is currently generating about -0.05 per unit of risk. If you would invest  21,000  in TF Bank AB on February 29, 2024 and sell it today you would earn a total of  1,500  from holding TF Bank AB or generate 7.14% return on investment over 90 days.

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

TF Bank AB  vs.  Filo Mining Corp

TF Bank AB

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TF Bank AB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TF Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Filo Mining Corp

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Filo Mining Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Filo Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TF Bank and Filo Mining

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

The idea behind TF Bank AB and Filo Mining 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.