Correlation Between Regal Investment and TPG Telecom

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

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

Diversification Opportunities for Regal Investment and TPG Telecom

-0.59

Correlation Coefficient

Regal Investment  TPG Telecom

Excellent diversification

The 3 months correlation between Regal and TPG is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment and TPG Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom and Regal 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 Regal Investment are associated (or correlated) with TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom has no effect on the direction of Regal Investment i.e., Regal Investment and TPG Telecom go up and down completely randomly.

Pair Corralation between Regal Investment and TPG Telecom

Assuming the 90 days trading horizon Regal Investment is expected to under-perform the TPG Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Regal Investment is 1.36 times less risky than TPG Telecom. The stock trades about -0.08 of its potential returns per unit of risk. The TPG Telecom is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  422.00  in TPG Telecom on December 20, 2024 and sell it today you would earn a total of  60.00  from holding TPG Telecom or generate 14.22% return on investment over 90 days.

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

Regal Investment  vs.  TPG Telecom

Regal Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regal Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Regal Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

TPG Telecom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Telecom are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, TPG Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regal Investment and TPG Telecom

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

The idea behind Regal Investment and TPG Telecom 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.