Correlation Between TMST Old and Commercial Metals

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

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

Diversification Opportunities for TMST Old and Commercial Metals

-0.12

Correlation Coefficient

TMST Old  Commercial Metals

Good diversification

The 3 months correlation between TMST and Commercial is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding TMST Old and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals and TMST Old 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 TMST Old are associated (or correlated) with Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of TMST Old i.e., TMST Old and Commercial Metals go up and down completely randomly.

Pair Corralation between TMST Old and Commercial Metals

If you would invest  2,279  in TMST Old on July 26, 2024 and sell it today you would earn a total of  0.00  from holding TMST Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.35%
Values	Daily Returns

TMST Old  vs.  Commercial Metals

TMST Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMST Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TMST Old is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Commercial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in November 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with TMST Old and Commercial Metals

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

The idea behind TMST Old and Commercial Metals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.