Correlation Between SPCG Public and TPC Power

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

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

Diversification Opportunities for SPCG Public and TPC Power

0.84

Correlation Coefficient

SPCG Public  TPC Power

Very poor diversification

The 3 months correlation between SPCG and TPC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SPCG 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 SPCG Public 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 SPCG 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 SPCG Public i.e., SPCG Public and TPC Power go up and down completely randomly.

Pair Corralation between SPCG Public and TPC Power

Assuming the 90 days trading horizon SPCG Public is expected to under-perform the TPC Power. But the stock apears to be less risky and, when comparing its historical volatility, SPCG Public is 1.5 times less risky than TPC Power. The stock trades about -0.06 of its potential returns per unit of risk. The TPC Power Holding is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  618.00  in TPC Power Holding on September 23, 2024 and sell it today you would lose (150.00) from holding TPC Power Holding or give up 24.27% of portfolio value over 90 days.

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

SPCG Public  vs.  TPC Power Holding

SPCG Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPCG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with SPCG Public and TPC Power

The main advantage of trading using opposite SPCG Public and TPC Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPCG Public 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 SPCG 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.