Correlation Between Brunel International and Tetragon Financial

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

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

Diversification Opportunities for Brunel International and Tetragon Financial

0.23

Correlation Coefficient

Brunel International  Tetragon Financial

Modest diversification

The 3 months correlation between Brunel and Tetragon is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brunel International 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 Brunel International 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 Brunel International 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 Brunel International i.e., Brunel International and Tetragon Financial go up and down completely randomly.

Pair Corralation between Brunel International and Tetragon Financial

Assuming the 90 days trading horizon Brunel International NV is expected to generate 0.87 times more return on investment than Tetragon Financial. However, Brunel International NV is 1.14 times less risky than Tetragon Financial. It trades about 0.13 of its potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.07 per unit of risk. If you would invest  892.00  in Brunel International NV on December 5, 2024 and sell it today you would earn a total of  122.00  from holding Brunel International NV or generate 13.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Brunel International NV  vs.  Tetragon Financial Group

Brunel International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brunel International NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Brunel International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tetragon Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Tetragon Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Brunel International and Tetragon Financial

The main advantage of trading using opposite Brunel International and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunel International 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 Brunel International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.