Correlation Between Axalta Coating and TPG Telecom
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and TPG Telecom 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 Axalta Coating and TPG Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and TPG Telecom Limited, you can compare the effects of market volatilities on Axalta Coating and TPG Telecom 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 Axalta Coating with a short position of TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and TPG Telecom.
Diversification Opportunities for Axalta Coating and TPG Telecom
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Axalta and TPG is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and TPG Telecom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom Limited and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom Limited has no effect on the direction of Axalta Coating i.e., Axalta Coating and TPG Telecom go up and down completely randomly.
Pair Corralation between Axalta Coating and TPG Telecom
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.66 times more return on investment than TPG Telecom. However, Axalta Coating Systems is 1.52 times less risky than TPG Telecom. It trades about -0.1 of its potential returns per unit of risk. TPG Telecom Limited is currently generating about -0.13 per unit of risk. If you would invest 4,059 in Axalta Coating Systems on December 2, 2024 and sell it today you would lose (438.00) from holding Axalta Coating Systems or give up 10.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Axalta Coating Systems vs. TPG Telecom Limited
Performance |
Timeline |
Axalta Coating Systems |
TPG Telecom Limited |
Axalta Coating and TPG Telecom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axalta Coating and TPG Telecom
The main advantage of trading using opposite Axalta Coating and TPG Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, TPG Telecom 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 TPG Telecom will offset losses from the drop in TPG Telecom's long position.Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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