Correlation Between TMTG and ME

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

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

Diversification Opportunities for TMTG and ME

0.0

Correlation Coefficient

TMTG  ME

Pay attention - limited upside

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

Pair Corralation between TMTG and ME

If you would invest  0.03  in ME on January 20, 2024 and sell it today you would earn a total of  0.04  from holding ME or generate 123.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	43.19%
Values	Daily Returns

TMTG  vs.  ME

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ME

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ME are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ME exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TMTG and ME

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

The idea behind TMTG and ME 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.