Correlation Between CK Power and TPI Polene

Can any of the company-specific risk be diversified away by investing in both CK 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 CK 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 CK Power Public and TPI Polene Power, you can compare the effects of market volatilities on CK 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 CK Power with a short position of TPI Polene. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Power and TPI Polene.

Diversification Opportunities for CK Power and TPI Polene

0.22

Correlation Coefficient

CK Power  TPI Polene

Modest diversification

The 3 months correlation between CKP-R and TPI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CK 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 CK 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 CK 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 CK Power i.e., CK Power and TPI Polene go up and down completely randomly.

Pair Corralation between CK Power and TPI Polene

Assuming the 90 days trading horizon CK Power Public is expected to under-perform the TPI Polene. In addition to that, CK Power is 2.15 times more volatile than TPI Polene Power. It trades about -0.1 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  289.00  in TPI Polene Power on September 3, 2024 and sell it today you would earn a total of  9.00  from holding TPI Polene Power or generate 3.11% return on investment over 90 days.

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

CK Power Public  vs.  TPI Polene Power

CK Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CK Power Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

TPI Polene Power

Risk-Adjusted Performance

5 of 100

Modest

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CK Power and TPI Polene

The main advantage of trading using opposite CK Power and TPI Polene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK 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 CK 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.