Correlation Between ESAB Corp and TechPrecision Common

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

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

Diversification Opportunities for ESAB Corp and TechPrecision Common

-0.51

Correlation Coefficient

ESAB Corp  TechPrecision Common

Excellent diversification

The 3 months correlation between ESAB and TechPrecision is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ESAB Corp and TechPrecision Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechPrecision Common and ESAB Corp 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 ESAB Corp are associated (or correlated) with TechPrecision Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechPrecision Common has no effect on the direction of ESAB Corp i.e., ESAB Corp and TechPrecision Common go up and down completely randomly.

Pair Corralation between ESAB Corp and TechPrecision Common

Given the investment horizon of 90 days ESAB Corp is expected to under-perform the TechPrecision Common. But the stock apears to be less risky and, when comparing its historical volatility, ESAB Corp is 1.8 times less risky than TechPrecision Common. The stock trades about -0.03 of its potential returns per unit of risk. The TechPrecision Common is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  397.00  in TechPrecision Common on May 26, 2025 and sell it today you would earn a total of  106.00  from holding TechPrecision Common or generate 26.7% return on investment over 90 days.

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

ESAB Corp  vs.  TechPrecision Common

ESAB Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days ESAB Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ESAB Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

TechPrecision Common

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in TechPrecision Common are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, TechPrecision Common unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ESAB Corp and TechPrecision Common

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

The idea behind ESAB Corp and TechPrecision Common 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.