Correlation Between Aalberts Industries and Tetragon Financial

Can any of the company-specific risk be diversified away by investing in both Aalberts Industries and Tetragon Financial 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 Aalberts Industries and Tetragon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aalberts Industries NV and Tetragon Financial Group, you can compare the effects of market volatilities on Aalberts Industries and Tetragon Financial 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 Aalberts Industries with a short position of Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aalberts Industries and Tetragon Financial.

Diversification Opportunities for Aalberts Industries and Tetragon Financial

0.36

Correlation Coefficient

Aalberts Industries  Tetragon Financial

Weak diversification

The 3 months correlation between Aalberts and Tetragon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aalberts Industries NV and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial and Aalberts Industries 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 Aalberts Industries NV are associated (or correlated) with Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of Aalberts Industries i.e., Aalberts Industries and Tetragon Financial go up and down completely randomly.

Pair Corralation between Aalberts Industries and Tetragon Financial

Assuming the 90 days trading horizon Aalberts Industries NV is expected to under-perform the Tetragon Financial. But the stock apears to be less risky and, when comparing its historical volatility, Aalberts Industries NV is 1.6 times less risky than Tetragon Financial. The stock trades about -0.02 of its potential returns per unit of risk. The Tetragon Financial Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,002  in Tetragon Financial Group on October 7, 2024 and sell it today you would earn a total of  408.00  from holding Tetragon Financial Group or generate 40.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Aalberts Industries NV  vs.  Tetragon Financial Group

Aalberts Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aalberts Industries NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aalberts Industries is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Tetragon Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Tetragon Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aalberts Industries and Tetragon Financial

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

The idea behind Aalberts Industries NV and Tetragon Financial 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.