Correlation Between TLOS and FRM

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

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

Diversification Opportunities for TLOS and FRM

0.28

Correlation Coefficient

TLOS  FRM

Modest diversification

The 3 months correlation between TLOS and FRM is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TLOS and FRM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRM and TLOS 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 TLOS are associated (or correlated) with FRM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRM has no effect on the direction of TLOS i.e., TLOS and FRM go up and down completely randomly.

Pair Corralation between TLOS and FRM

Assuming the 90 days trading horizon TLOS is expected to generate 51.23 times less return on investment than FRM. But when comparing it to its historical volatility, TLOS is 5.41 times less risky than FRM. It trades about 0.0 of its potential returns per unit of risk. FRM is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.07  in FRM on May 3, 2025 and sell it today you would lose (4.02) from holding FRM or give up 98.77% of portfolio value over 90 days.

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

TLOS  vs.  FRM

TLOS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TLOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for TLOS shareholders.

FRM

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FRM are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, FRM exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TLOS and FRM

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

The idea behind TLOS and FRM 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.