Correlation Between Tangerine Beach and Peoples Insurance

Can any of the company-specific risk be diversified away by investing in both Tangerine Beach and Peoples Insurance 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 Tangerine Beach and Peoples Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tangerine Beach Hotels and Peoples Insurance PLC, you can compare the effects of market volatilities on Tangerine Beach and Peoples Insurance 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 Tangerine Beach with a short position of Peoples Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tangerine Beach and Peoples Insurance.

Diversification Opportunities for Tangerine Beach and Peoples Insurance

0.81

Correlation Coefficient

Tangerine Beach  Peoples Insurance

Very poor diversification

The 3 months correlation between Tangerine and Peoples is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tangerine Beach Hotels and Peoples Insurance PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance PLC and Tangerine Beach 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 Tangerine Beach Hotels are associated (or correlated) with Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance PLC has no effect on the direction of Tangerine Beach i.e., Tangerine Beach and Peoples Insurance go up and down completely randomly.

Pair Corralation between Tangerine Beach and Peoples Insurance

Assuming the 90 days trading horizon Tangerine Beach Hotels is expected to under-perform the Peoples Insurance. In addition to that, Tangerine Beach is 1.07 times more volatile than Peoples Insurance PLC. It trades about -0.09 of its total potential returns per unit of risk. Peoples Insurance PLC is currently generating about -0.04 per unit of volatility. If you would invest  3,190  in Peoples Insurance PLC on December 29, 2024 and sell it today you would lose (260.00) from holding Peoples Insurance PLC or give up 8.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.83%
Values	Daily Returns

Tangerine Beach Hotels  vs.  Peoples Insurance PLC

Tangerine Beach Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tangerine Beach Hotels 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 basic indicators 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.

Peoples Insurance PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peoples Insurance PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Tangerine Beach and Peoples Insurance

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

The idea behind Tangerine Beach Hotels and Peoples Insurance PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.