Correlation Between TPK Holding and Catcher Technology

Can any of the company-specific risk be diversified away by investing in both TPK Holding and Catcher Technology 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 TPK Holding and Catcher Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TPK Holding Co and Catcher Technology Co, you can compare the effects of market volatilities on TPK Holding and Catcher Technology 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 TPK Holding with a short position of Catcher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPK Holding and Catcher Technology.

Diversification Opportunities for TPK Holding and Catcher Technology

0.69

Correlation Coefficient

TPK Holding  Catcher Technology

Poor diversification

The 3 months correlation between TPK and Catcher is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TPK Holding Co and Catcher Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catcher Technology and TPK Holding 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 TPK Holding Co are associated (or correlated) with Catcher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catcher Technology has no effect on the direction of TPK Holding i.e., TPK Holding and Catcher Technology go up and down completely randomly.

Pair Corralation between TPK Holding and Catcher Technology

Assuming the 90 days trading horizon TPK Holding Co is expected to generate 1.55 times more return on investment than Catcher Technology. However, TPK Holding is 1.55 times more volatile than Catcher Technology Co. It trades about 0.04 of its potential returns per unit of risk. Catcher Technology Co is currently generating about 0.02 per unit of risk. If you would invest  2,937  in TPK Holding Co on September 16, 2024 and sell it today you would earn a total of  958.00  from holding TPK Holding Co or generate 32.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

TPK Holding Co  vs.  Catcher Technology Co

TPK Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TPK Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Catcher Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catcher Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with TPK Holding and Catcher Technology

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

The idea behind TPK Holding Co and Catcher Technology Co 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.

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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.