Correlation Between TRAINLINE PLC and PATTIES FOODS

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

By analyzing existing cross correlation between TRAINLINE PLC LS and PATTIES FOODS , you can compare the effects of market volatilities on TRAINLINE PLC and PATTIES FOODS 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 TRAINLINE PLC with a short position of PATTIES FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and PATTIES FOODS.

Diversification Opportunities for TRAINLINE PLC and PATTIES FOODS

-0.17

Correlation Coefficient

TRAINLINE PLC  PATTIES FOODS

Good diversification

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

Pair Corralation between TRAINLINE PLC and PATTIES FOODS

Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the PATTIES FOODS. But the stock apears to be less risky and, when comparing its historical volatility, TRAINLINE PLC LS is 1.77 times less risky than PATTIES FOODS. The stock trades about -0.01 of its potential returns per unit of risk. The PATTIES FOODS is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  31.00  in PATTIES FOODS on April 22, 2025 and sell it today you would earn a total of  42.00  from holding PATTIES FOODS or generate 135.48% return on investment over 90 days.

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

TRAINLINE PLC LS  vs.  PATTIES FOODS

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRAINLINE PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PATTIES FOODS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PATTIES FOODS are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PATTIES FOODS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAINLINE PLC and PATTIES FOODS

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

The idea behind TRAINLINE PLC LS and PATTIES FOODS 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.