Correlation Between FGI Industries and TPX Old

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

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

Diversification Opportunities for FGI Industries and TPX Old

0.03

Correlation Coefficient

FGI Industries  TPX Old

Significant diversification

The 3 months correlation between FGI and TPX is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding FGI Industries and TPX Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPX Old and FGI 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 FGI Industries are associated (or correlated) with TPX Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPX Old has no effect on the direction of FGI Industries i.e., FGI Industries and TPX Old go up and down completely randomly.

Pair Corralation between FGI Industries and TPX Old

Considering the 90-day investment horizon FGI Industries is expected to generate 5.63 times less return on investment than TPX Old. In addition to that, FGI Industries is 1.93 times more volatile than TPX Old. It trades about 0.03 of its total potential returns per unit of risk. TPX Old is currently generating about 0.31 per unit of volatility. If you would invest  5,583  in TPX Old on December 26, 2024 and sell it today you would earn a total of  1,295  from holding TPX Old or generate 23.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	57.38%
Values	Daily Returns

FGI Industries  vs.  TPX Old

FGI Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FGI Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, FGI Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TPX Old

Risk-Adjusted Performance

Solid

Over the last 90 days TPX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, TPX Old showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FGI Industries and TPX Old

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

The idea behind FGI Industries and TPX Old 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.