Correlation Between TPI Polene and Eastern Power
Can any of the company-specific risk be diversified away by investing in both TPI Polene and Eastern Power 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 TPI Polene and Eastern Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPI Polene Power and Eastern Power Group, you can compare the effects of market volatilities on TPI Polene and Eastern Power 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 TPI Polene with a short position of Eastern Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPI Polene and Eastern Power.
Diversification Opportunities for TPI Polene and Eastern Power
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TPI and Eastern is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding TPI Polene Power and Eastern Power Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Power Group and TPI Polene 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 TPI Polene Power are associated (or correlated) with Eastern Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Power Group has no effect on the direction of TPI Polene i.e., TPI Polene and Eastern Power go up and down completely randomly.
Pair Corralation between TPI Polene and Eastern Power
Assuming the 90 days trading horizon TPI Polene Power is expected to generate 0.3 times more return on investment than Eastern Power. However, TPI Polene Power is 3.31 times less risky than Eastern Power. It trades about -0.12 of its potential returns per unit of risk. Eastern Power Group is currently generating about -0.05 per unit of risk. If you would invest 297.00 in TPI Polene Power on December 4, 2024 and sell it today you would lose (37.00) from holding TPI Polene Power or give up 12.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
TPI Polene Power vs. Eastern Power Group
Performance |
| Timeline |
| TPI Polene Power |
| Eastern Power Group |
TPI Polene and Eastern Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPI Polene and Eastern Power
The main advantage of trading using opposite TPI Polene and Eastern Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPI Polene position performs unexpectedly, Eastern Power 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 Eastern Power will offset losses from the drop in Eastern Power's long position.| TPI Polene vs. Ratch Group Public | TPI Polene vs. BCPG Public | TPI Polene vs. Gulf Energy Development | TPI Polene vs. BTS Group Holdings |
| Eastern Power vs. BCPG Public | Eastern Power vs. Diamond Building Products | Eastern Power vs. Earth Tech Environment | Eastern Power vs. TPI Polene Power |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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