Correlation Between TPK Holding and LARGAN Precision

Can any of the company-specific risk be diversified away by investing in both TPK Holding and LARGAN Precision 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 LARGAN Precision 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 LARGAN Precision Co, you can compare the effects of market volatilities on TPK Holding and LARGAN Precision 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 LARGAN Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPK Holding and LARGAN Precision.

Diversification Opportunities for TPK Holding and LARGAN Precision

0.56

Correlation Coefficient

TPK Holding  LARGAN Precision

Very weak diversification

The 3 months correlation between TPK and LARGAN is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding TPK Holding Co and LARGAN Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LARGAN Precision 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 LARGAN Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LARGAN Precision has no effect on the direction of TPK Holding i.e., TPK Holding and LARGAN Precision go up and down completely randomly.

Pair Corralation between TPK Holding and LARGAN Precision

Assuming the 90 days trading horizon TPK Holding Co is expected to under-perform the LARGAN Precision. In addition to that, TPK Holding is 1.1 times more volatile than LARGAN Precision Co. It trades about -0.12 of its total potential returns per unit of risk. LARGAN Precision Co is currently generating about 0.26 per unit of volatility. If you would invest  234,500  in LARGAN Precision Co on September 17, 2024 and sell it today you would earn a total of  19,500  from holding LARGAN Precision Co or generate 8.32% return on investment over 90 days.

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

TPK Holding Co  vs.  LARGAN Precision 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.

LARGAN Precision

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LARGAN Precision Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, LARGAN Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with TPK Holding and LARGAN Precision

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

The idea behind TPK Holding Co and LARGAN Precision 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.