Correlation Between TPK Holding and Pegatron Corp

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

Diversification Opportunities for TPK Holding and Pegatron Corp

0.7

Correlation Coefficient

TPK Holding  Pegatron Corp

Poor diversification

The 3 months correlation between TPK and Pegatron is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TPK Holding Co and Pegatron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegatron Corp 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 Pegatron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegatron Corp has no effect on the direction of TPK Holding i.e., TPK Holding and Pegatron Corp go up and down completely randomly.

Pair Corralation between TPK Holding and Pegatron Corp

Assuming the 90 days trading horizon TPK Holding Co is expected to under-perform the Pegatron Corp. In addition to that, TPK Holding is 1.23 times more volatile than Pegatron Corp. It trades about -0.12 of its total potential returns per unit of risk. Pegatron Corp is currently generating about -0.08 per unit of volatility. If you would invest  9,760  in Pegatron Corp on September 17, 2024 and sell it today you would lose (240.00) from holding Pegatron Corp or give up 2.46% of portfolio value over 90 days.

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

TPK Holding Co  vs.  Pegatron Corp

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.

Pegatron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pegatron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with TPK Holding and Pegatron Corp

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

The idea behind TPK Holding Co and Pegatron Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.