Correlation Between Tachan Securities and TPK Holding
Can any of the company-specific risk be diversified away by investing in both Tachan Securities and TPK Holding 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 Tachan Securities and TPK Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tachan Securities Co and TPK Holding Co, you can compare the effects of market volatilities on Tachan Securities and TPK Holding 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 Tachan Securities with a short position of TPK Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tachan Securities and TPK Holding.
Diversification Opportunities for Tachan Securities and TPK Holding
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tachan and TPK is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tachan Securities Co and TPK Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPK Holding and Tachan Securities 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 Tachan Securities Co are associated (or correlated) with TPK Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPK Holding has no effect on the direction of Tachan Securities i.e., Tachan Securities and TPK Holding go up and down completely randomly.
Pair Corralation between Tachan Securities and TPK Holding
Assuming the 90 days trading horizon Tachan Securities Co is expected to generate 0.47 times more return on investment than TPK Holding. However, Tachan Securities Co is 2.11 times less risky than TPK Holding. It trades about 0.03 of its potential returns per unit of risk. TPK Holding Co is currently generating about -0.09 per unit of risk. If you would invest 1,880 in Tachan Securities Co on November 6, 2024 and sell it today you would earn a total of 5.00 from holding Tachan Securities Co or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tachan Securities Co vs. TPK Holding Co
Performance |
| Timeline |
| Tachan Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| TPK Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tachan Securities and TPK Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tachan Securities and TPK Holding
The main advantage of trading using opposite Tachan Securities and TPK Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tachan Securities position performs unexpectedly, TPK Holding 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 TPK Holding will offset losses from the drop in TPK Holding's long position.The idea behind Tachan Securities Co and TPK Holding Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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