Correlation Between TPG Telecom and West African
Can any of the company-specific risk be diversified away by investing in both TPG Telecom and West African 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 West African into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Telecom and West African Resources, you can compare the effects of market volatilities on TPG Telecom and West African 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 West African. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG Telecom and West African.
Diversification Opportunities for TPG Telecom and West African
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TPG and West is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding TPG Telecom and West African Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West African Resources 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 West African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West African Resources has no effect on the direction of TPG Telecom i.e., TPG Telecom and West African go up and down completely randomly.
Pair Corralation between TPG Telecom and West African
Assuming the 90 days trading horizon TPG Telecom is expected to under-perform the West African. But the stock apears to be less risky and, when comparing its historical volatility, TPG Telecom is 2.42 times less risky than West African. The stock trades about -0.04 of its potential returns per unit of risk. The West African Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 140.00 in West African Resources on August 28, 2024 and sell it today you would earn a total of 10.00 from holding West African Resources or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
TPG Telecom vs. West African Resources
Performance |
| Timeline |
| TPG Telecom |
| West African Resources |
TPG Telecom and West African Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG Telecom and West African
The main advantage of trading using opposite TPG Telecom and West African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG Telecom position performs unexpectedly, West African 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 West African will offset losses from the drop in West African's long position.| TPG Telecom vs. National Australia Bank | TPG Telecom vs. National Australia Bank | TPG Telecom vs. Westpac Banking | TPG Telecom vs. National Australia Bank |
| West African vs. Finexia Financial Group | West African vs. Macquarie Bank Limited | West African vs. TPG Telecom | West African vs. Hotel Property Investments |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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