Correlation Between Constellation Software and Tincorp Metals

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

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

Diversification Opportunities for Constellation Software and Tincorp Metals

-0.07

Correlation Coefficient

Constellation Software  Tincorp Metals

Good diversification

The 3 months correlation between Constellation and Tincorp is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Tincorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tincorp Metals and Constellation Software 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 Constellation Software are associated (or correlated) with Tincorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tincorp Metals has no effect on the direction of Constellation Software i.e., Constellation Software and Tincorp Metals go up and down completely randomly.

Pair Corralation between Constellation Software and Tincorp Metals

Assuming the 90 days trading horizon Constellation Software is expected to generate 0.68 times more return on investment than Tincorp Metals. However, Constellation Software is 1.47 times less risky than Tincorp Metals. It trades about 0.09 of its potential returns per unit of risk. Tincorp Metals is currently generating about -0.05 per unit of risk. If you would invest  456,371  in Constellation Software on April 13, 2025 and sell it today you would earn a total of  32,435  from holding Constellation Software or generate 7.11% return on investment over 90 days.

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

Constellation Software  vs.  Tincorp Metals

Constellation Software

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Constellation Software may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Tincorp Metals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Constellation Software and Tincorp Metals

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

The idea behind Constellation Software and Tincorp Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.