Correlation Between TMTG and HYN

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

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

Diversification Opportunities for TMTG and HYN

0.0

Correlation Coefficient

TMTG  HYN

Pay attention - limited upside

The 3 months correlation between TMTG and HYN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TMTG and HYN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYN and TMTG 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 TMTG are associated (or correlated) with HYN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYN has no effect on the direction of TMTG i.e., TMTG and HYN go up and down completely randomly.

Pair Corralation between TMTG and HYN

Assuming the 90 days trading horizon TMTG is expected to under-perform the HYN. In addition to that, TMTG is 1.5 times more volatile than HYN. It trades about -0.01 of its total potential returns per unit of risk. HYN is currently generating about 0.0 per unit of volatility. If you would invest  4.01  in HYN on January 20, 2024 and sell it today you would lose (0.70) from holding HYN or give up 17.46% of portfolio value over 90 days.

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

TMTG  vs.  HYN

TMTG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMTG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TMTG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

HYN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HYN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HYN is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TMTG and HYN

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

The idea behind TMTG and HYN 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.