Correlation Between BGrimm Power and TPI Polene

Can any of the company-specific risk be diversified away by investing in both BGrimm Power and TPI Polene 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 BGrimm Power and TPI Polene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BGrimm Power Public and TPI Polene Power, you can compare the effects of market volatilities on BGrimm Power and TPI Polene 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 BGrimm Power with a short position of TPI Polene. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGrimm Power and TPI Polene.

Diversification Opportunities for BGrimm Power and TPI Polene

0.58

Correlation Coefficient

BGrimm Power  TPI Polene

Very weak diversification

The 3 months correlation between BGrimm and TPI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BGrimm Power Public and TPI Polene Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPI Polene Power and BGrimm Power 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 BGrimm Power Public are associated (or correlated) with TPI Polene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPI Polene Power has no effect on the direction of BGrimm Power i.e., BGrimm Power and TPI Polene go up and down completely randomly.

Pair Corralation between BGrimm Power and TPI Polene

Assuming the 90 days trading horizon BGrimm Power Public is expected to under-perform the TPI Polene. In addition to that, BGrimm Power is 2.12 times more volatile than TPI Polene Power. It trades about -0.01 of its total potential returns per unit of risk. TPI Polene Power is currently generating about 0.06 per unit of volatility. If you would invest  293.00  in TPI Polene Power on September 4, 2024 and sell it today you would earn a total of  9.00  from holding TPI Polene Power or generate 3.07% return on investment over 90 days.

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

BGrimm Power Public  vs.  TPI Polene Power

BGrimm Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGrimm Power Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BGrimm Power is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

TPI Polene Power

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TPI Polene Power are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, TPI Polene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BGrimm Power and TPI Polene

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

The idea behind BGrimm Power Public and TPI Polene Power 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.