Correlation Between Tetragon Financial and Kendrion
Can any of the company-specific risk be diversified away by investing in both Tetragon Financial and Kendrion 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 Tetragon Financial and Kendrion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tetragon Financial Group and Kendrion NV, you can compare the effects of market volatilities on Tetragon Financial and Kendrion 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 Tetragon Financial with a short position of Kendrion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetragon Financial and Kendrion.
Diversification Opportunities for Tetragon Financial and Kendrion
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tetragon and Kendrion is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and Kendrion NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kendrion NV and Tetragon Financial 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 Tetragon Financial Group are associated (or correlated) with Kendrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kendrion NV has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and Kendrion go up and down completely randomly.
Pair Corralation between Tetragon Financial and Kendrion
Assuming the 90 days trading horizon Tetragon Financial Group is expected to generate 0.96 times more return on investment than Kendrion. However, Tetragon Financial Group is 1.04 times less risky than Kendrion. It trades about 0.12 of its potential returns per unit of risk. Kendrion NV is currently generating about -0.1 per unit of risk. If you would invest 1,230 in Tetragon Financial Group on August 24, 2024 and sell it today you would earn a total of 50.00 from holding Tetragon Financial Group or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tetragon Financial Group vs. Kendrion NV
Performance |
| Timeline |
| Tetragon Financial |
| Kendrion NV |
Tetragon Financial and Kendrion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tetragon Financial and Kendrion
The main advantage of trading using opposite Tetragon Financial and Kendrion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tetragon Financial position performs unexpectedly, Kendrion 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 Kendrion will offset losses from the drop in Kendrion's long position.The idea behind Tetragon Financial Group and Kendrion NV 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.| Kendrion vs. TKH Group NV | Kendrion vs. NV Nederlandsche Apparatenfabriek | Kendrion vs. Brunel International NV | Kendrion vs. Aalberts Industries NV |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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