Correlation Between AES Corp and TBC Bank

Can any of the company-specific risk be diversified away by investing in both AES Corp and TBC Bank 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 AES Corp and TBC Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AES Corp and TBC Bank Group, you can compare the effects of market volatilities on AES Corp and TBC Bank 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 AES Corp with a short position of TBC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES Corp and TBC Bank.

Diversification Opportunities for AES Corp and TBC Bank

-0.78

Correlation Coefficient

AES Corp  TBC Bank

Pay attention - limited upside

The 3 months correlation between AES and TBC is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp and TBC Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBC Bank Group and AES Corp 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 AES Corp are associated (or correlated) with TBC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBC Bank Group has no effect on the direction of AES Corp i.e., AES Corp and TBC Bank go up and down completely randomly.

Pair Corralation between AES Corp and TBC Bank

Assuming the 90 days trading horizon AES Corp is expected to under-perform the TBC Bank. In addition to that, AES Corp is 1.44 times more volatile than TBC Bank Group. It trades about -0.18 of its total potential returns per unit of risk. TBC Bank Group is currently generating about 0.0 per unit of volatility. If you would invest  307,500  in TBC Bank Group on October 22, 2024 and sell it today you would lose (1,000.00) from holding TBC Bank Group or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AES Corp  vs.  TBC Bank Group

AES Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AES Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TBC Bank Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TBC Bank Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TBC Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AES Corp and TBC Bank

The main advantage of trading using opposite AES Corp and TBC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES Corp position performs unexpectedly, TBC Bank 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 TBC Bank will offset losses from the drop in TBC Bank's long position.

The idea behind AES Corp and TBC Bank Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.