Correlation Between Trio Tech and Searchlight Solutions

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

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

Diversification Opportunities for Trio Tech and Searchlight Solutions

0.0

Correlation Coefficient

Trio Tech  Searchlight Solutions

Pay attention - limited upside

The 3 months correlation between Trio and Searchlight is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and Searchlight Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Solutions and Trio Tech 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 Trio Tech International are associated (or correlated) with Searchlight Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Solutions has no effect on the direction of Trio Tech i.e., Trio Tech and Searchlight Solutions go up and down completely randomly.

Pair Corralation between Trio Tech and Searchlight Solutions

If you would invest  605.00  in Trio Tech International on September 29, 2024 and sell it today you would earn a total of  9.00  from holding Trio Tech International or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Trio Tech International  vs.  Searchlight Solutions

Trio Tech International

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Tech International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Trio Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Searchlight Solutions

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Trio Tech and Searchlight Solutions

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

The idea behind Trio Tech International and Searchlight Solutions 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.