Correlation Between Pandora AS and TCM

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

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

Diversification Opportunities for Pandora AS and TCM

-0.8

Correlation Coefficient

Pandora AS  TCM

Pay attention - limited upside

The 3 months correlation between Pandora and TCM is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pandora AS and TCM Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCM Group and Pandora AS 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 Pandora AS are associated (or correlated) with TCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCM Group has no effect on the direction of Pandora AS i.e., Pandora AS and TCM go up and down completely randomly.

Pair Corralation between Pandora AS and TCM

Assuming the 90 days trading horizon Pandora AS is expected to under-perform the TCM. But the stock apears to be less risky and, when comparing its historical volatility, Pandora AS is 1.3 times less risky than TCM. The stock trades about -0.17 of its potential returns per unit of risk. The TCM Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,700  in TCM Group on December 30, 2024 and sell it today you would earn a total of  940.00  from holding TCM Group or generate 14.03% return on investment over 90 days.

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

Pandora AS  vs.  TCM Group

Pandora AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pandora AS 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 fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

TCM Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TCM Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, TCM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pandora AS and TCM

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

The idea behind Pandora AS and TCM 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.