Correlation Between Industrial Investment and TCPL Packaging

Can any of the company-specific risk be diversified away by investing in both Industrial Investment and TCPL Packaging 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 Industrial Investment and TCPL Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Industrial Investment Trust and TCPL Packaging Limited, you can compare the effects of market volatilities on Industrial Investment and TCPL Packaging 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 Industrial Investment with a short position of TCPL Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Investment and TCPL Packaging.

Diversification Opportunities for Industrial Investment and TCPL Packaging

-0.88

Correlation Coefficient

Industrial Investment  TCPL Packaging

Pay attention - limited upside

The 3 months correlation between Industrial and TCPL is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and TCPL Packaging Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCPL Packaging and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with TCPL Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCPL Packaging has no effect on the direction of Industrial Investment i.e., Industrial Investment and TCPL Packaging go up and down completely randomly.

Pair Corralation between Industrial Investment and TCPL Packaging

Assuming the 90 days trading horizon Industrial Investment Trust is expected to under-perform the TCPL Packaging. But the stock apears to be less risky and, when comparing its historical volatility, Industrial Investment Trust is 1.04 times less risky than TCPL Packaging. The stock trades about -0.22 of its potential returns per unit of risk. The TCPL Packaging Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  322,140  in TCPL Packaging Limited on December 30, 2024 and sell it today you would earn a total of  134,395  from holding TCPL Packaging Limited or generate 41.72% return on investment over 90 days.

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

Industrial Investment Trust  vs.  TCPL Packaging Limited

Industrial Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrial Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TCPL Packaging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TCPL Packaging Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, TCPL Packaging exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industrial Investment and TCPL Packaging

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

The idea behind Industrial Investment Trust and TCPL Packaging Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.