Correlation Between Turtle Beach and Sony Corp

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

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

Diversification Opportunities for Turtle Beach and Sony Corp

-0.4

Correlation Coefficient

Turtle Beach  Sony Corp

Very good diversification

The 3 months correlation between Turtle and Sony is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Turtle Beach Corp and Sony Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Corp and Turtle Beach 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 Turtle Beach Corp are associated (or correlated) with Sony Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Corp has no effect on the direction of Turtle Beach i.e., Turtle Beach and Sony Corp go up and down completely randomly.

Pair Corralation between Turtle Beach and Sony Corp

Given the investment horizon of 90 days Turtle Beach Corp is expected to generate 2.12 times more return on investment than Sony Corp. However, Turtle Beach is 2.12 times more volatile than Sony Corp. It trades about 0.01 of its potential returns per unit of risk. Sony Corp is currently generating about 0.01 per unit of risk. If you would invest  1,749  in Turtle Beach Corp on February 5, 2024 and sell it today you would lose (243.00) from holding Turtle Beach Corp or give up 13.89% of portfolio value over 90 days.

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

Turtle Beach Corp  vs.  Sony Corp

Turtle Beach Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turtle Beach Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Turtle Beach reported solid returns over the last few months and may actually be approaching a breakup point.

Sony Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sony Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Turtle Beach and Sony Corp

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

The idea behind Turtle Beach Corp and Sony 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 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.