Correlation Between G Capital and TPC Power

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

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

Diversification Opportunities for G Capital and TPC Power

0.72

Correlation Coefficient

G Capital  TPC Power

Poor diversification

The 3 months correlation between GCAP and TPC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and TPC Power Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPC Power Holding and G Capital 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 G Capital Public are associated (or correlated) with TPC Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPC Power Holding has no effect on the direction of G Capital i.e., G Capital and TPC Power go up and down completely randomly.

Pair Corralation between G Capital and TPC Power

Assuming the 90 days trading horizon G Capital Public is expected to generate 3.75 times more return on investment than TPC Power. However, G Capital is 3.75 times more volatile than TPC Power Holding. It trades about -0.04 of its potential returns per unit of risk. TPC Power Holding is currently generating about -0.4 per unit of risk. If you would invest  34.00  in G Capital Public on October 15, 2024 and sell it today you would lose (2.00) from holding G Capital Public or give up 5.88% of portfolio value over 90 days.

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

G Capital Public  vs.  TPC Power Holding

G Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

TPC Power Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TPC Power Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with G Capital and TPC Power

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

The idea behind G Capital Public and TPC Power Holding 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.