Correlation Between PTG Energy and TQM PORATION

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

By analyzing existing cross correlation between PTG Energy PCL and TQM PORATION, you can compare the effects of market volatilities on PTG Energy and TQM PORATION 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 PTG Energy with a short position of TQM PORATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTG Energy and TQM PORATION.

Diversification Opportunities for PTG Energy and TQM PORATION

0.82

Correlation Coefficient

PTG Energy  TQM PORATION

Very poor diversification

The 3 months correlation between PTG and TQM is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PTG Energy PCL and TQM PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TQM PORATION and PTG Energy 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 PTG Energy PCL are associated (or correlated) with TQM PORATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TQM PORATION has no effect on the direction of PTG Energy i.e., PTG Energy and TQM PORATION go up and down completely randomly.

Pair Corralation between PTG Energy and TQM PORATION

Assuming the 90 days trading horizon PTG Energy PCL is expected to generate 0.6 times more return on investment than TQM PORATION. However, PTG Energy PCL is 1.66 times less risky than TQM PORATION. It trades about -0.05 of its potential returns per unit of risk. TQM PORATION is currently generating about -0.34 per unit of risk. If you would invest  735.00  in PTG Energy PCL on December 5, 2024 and sell it today you would lose (25.00) from holding PTG Energy PCL or give up 3.4% of portfolio value over 90 days.

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

PTG Energy PCL  vs.  TQM PORATION

PTG Energy PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTG Energy PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

TQM PORATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days TQM PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers 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.

Pair Trading with PTG Energy and TQM PORATION

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

The idea behind PTG Energy PCL and TQM PORATION 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.