Correlation Between TAC Consumer and Carabao Group

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

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

Diversification Opportunities for TAC Consumer and Carabao Group

0.1

Correlation Coefficient

TAC Consumer  Carabao Group

Average diversification

The 3 months correlation between TAC and Carabao is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding TAC Consumer Public and Carabao Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carabao Group Public and TAC Consumer 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 TAC Consumer Public are associated (or correlated) with Carabao Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carabao Group Public has no effect on the direction of TAC Consumer i.e., TAC Consumer and Carabao Group go up and down completely randomly.

Pair Corralation between TAC Consumer and Carabao Group

Assuming the 90 days trading horizon TAC Consumer Public is expected to generate 0.64 times more return on investment than Carabao Group. However, TAC Consumer Public is 1.56 times less risky than Carabao Group. It trades about -0.02 of its potential returns per unit of risk. Carabao Group Public is currently generating about -0.17 per unit of risk. If you would invest  464.00  in TAC Consumer Public on December 29, 2024 and sell it today you would lose (12.00) from holding TAC Consumer Public or give up 2.59% of portfolio value over 90 days.

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

TAC Consumer Public  vs.  Carabao Group Public

TAC Consumer Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TAC Consumer Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, TAC Consumer is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Carabao Group Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carabao Group Public 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.

Pair Trading with TAC Consumer and Carabao Group

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

The idea behind TAC Consumer Public and Carabao Group Public 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.