Correlation Between Card Factory and Tandy Leather

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

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

Diversification Opportunities for Card Factory and Tandy Leather

0.39

Correlation Coefficient

Card Factory  Tandy Leather

Weak diversification

The 3 months correlation between Card and Tandy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory and Card Factory 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 Card Factory plc are associated (or correlated) with Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of Card Factory i.e., Card Factory and Tandy Leather go up and down completely randomly.

Pair Corralation between Card Factory and Tandy Leather

Assuming the 90 days horizon Card Factory plc is expected to generate 0.87 times more return on investment than Tandy Leather. However, Card Factory plc is 1.15 times less risky than Tandy Leather. It trades about -0.1 of its potential returns per unit of risk. Tandy Leather Factory is currently generating about -0.11 per unit of risk. If you would invest  142.00  in Card Factory plc on September 11, 2025 and sell it today you would lose (13.00) from holding Card Factory plc or give up 9.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Card Factory plc  vs.  Tandy Leather Factory

Card Factory plc

Risk-Adjusted Performance

Weakest

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

Tandy Leather Factory

Risk-Adjusted Performance

Weakest

Over the last 90 days Tandy Leather Factory has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential 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 Card Factory and Tandy Leather

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

The idea behind Card Factory plc and Tandy Leather Factory 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.