Correlation Between Tabcorp Holdings and COG Financial

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

By analyzing existing cross correlation between Tabcorp Holdings and COG Financial Services, you can compare the effects of market volatilities on Tabcorp Holdings and COG Financial 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 Tabcorp Holdings with a short position of COG Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tabcorp Holdings and COG Financial.

Diversification Opportunities for Tabcorp Holdings and COG Financial

-0.73

Correlation Coefficient

Tabcorp Holdings  COG Financial

Pay attention - limited upside

The 3 months correlation between Tabcorp and COG is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tabcorp Holdings and COG Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COG Financial Services and Tabcorp Holdings 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 Tabcorp Holdings are associated (or correlated) with COG Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COG Financial Services has no effect on the direction of Tabcorp Holdings i.e., Tabcorp Holdings and COG Financial go up and down completely randomly.

Pair Corralation between Tabcorp Holdings and COG Financial

Assuming the 90 days trading horizon Tabcorp Holdings is expected to generate 1.34 times more return on investment than COG Financial. However, Tabcorp Holdings is 1.34 times more volatile than COG Financial Services. It trades about 0.14 of its potential returns per unit of risk. COG Financial Services is currently generating about -0.01 per unit of risk. If you would invest  41.00  in Tabcorp Holdings on October 3, 2024 and sell it today you would earn a total of  15.00  from holding Tabcorp Holdings or generate 36.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.82%
Values	Daily Returns

Tabcorp Holdings  vs.  COG Financial Services

Tabcorp Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tabcorp Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Tabcorp Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

COG Financial Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COG Financial Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, COG Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tabcorp Holdings and COG Financial

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

The idea behind Tabcorp Holdings and COG Financial Services 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.