Correlation Between Broadcom and Tusimple Holdings

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

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

Diversification Opportunities for Broadcom and Tusimple Holdings

-0.64

Correlation Coefficient

Broadcom  Tusimple Holdings

Excellent diversification

The 3 months correlation between Broadcom and Tusimple is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and Tusimple Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tusimple Holdings and Broadcom 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 Broadcom are associated (or correlated) with Tusimple Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tusimple Holdings has no effect on the direction of Broadcom i.e., Broadcom and Tusimple Holdings go up and down completely randomly.

Pair Corralation between Broadcom and Tusimple Holdings

Given the investment horizon of 90 days Broadcom is expected to generate 0.34 times more return on investment than Tusimple Holdings. However, Broadcom is 2.98 times less risky than Tusimple Holdings. It trades about 0.35 of its potential returns per unit of risk. Tusimple Holdings is currently generating about -0.01 per unit of risk. If you would invest  19,072  in Broadcom on April 29, 2025 and sell it today you would earn a total of  9,946  from holding Broadcom or generate 52.15% return on investment over 90 days.

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

Broadcom  vs.  Tusimple Holdings

Broadcom

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Broadcom displayed solid returns over the last few months and may actually be approaching a breakup point.

Tusimple Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tusimple Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Tusimple Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Broadcom and Tusimple Holdings

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

The idea behind Broadcom and Tusimple Holdings 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.