Correlation Between TPG Telecom and Catalyst Metals
Can any of the company-specific risk be diversified away by investing in both TPG Telecom and Catalyst 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 TPG Telecom and Catalyst Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Telecom and Catalyst Metals, you can compare the effects of market volatilities on TPG Telecom and Catalyst 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 TPG Telecom with a short position of Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG Telecom and Catalyst Metals.
Diversification Opportunities for TPG Telecom and Catalyst Metals
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TPG and Catalyst is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding TPG Telecom and Catalyst Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and TPG Telecom 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 TPG Telecom are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of TPG Telecom i.e., TPG Telecom and Catalyst Metals go up and down completely randomly.
Pair Corralation between TPG Telecom and Catalyst Metals
Assuming the 90 days trading horizon TPG Telecom is expected to generate 0.12 times more return on investment than Catalyst Metals. However, TPG Telecom is 8.27 times less risky than Catalyst Metals. It trades about -0.18 of its potential returns per unit of risk. Catalyst Metals is currently generating about -0.09 per unit of risk. If you would invest 451.00 in TPG Telecom on August 29, 2024 and sell it today you would lose (16.00) from holding TPG Telecom or give up 3.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG Telecom vs. Catalyst Metals
Performance |
| Timeline |
| TPG Telecom |
| Catalyst Metals |
TPG Telecom and Catalyst Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG Telecom and Catalyst Metals
The main advantage of trading using opposite TPG Telecom and Catalyst Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG Telecom position performs unexpectedly, Catalyst 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 Catalyst Metals will offset losses from the drop in Catalyst Metals' long position.| TPG Telecom vs. Pioneer Credit | TPG Telecom vs. MA Financial Group | TPG Telecom vs. Commonwealth Bank of | TPG Telecom vs. Prime Financial Group |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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