Correlation Between TBC Bank and Hardide PLC

Can any of the company-specific risk be diversified away by investing in both TBC Bank and Hardide PLC 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 TBC Bank and Hardide PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for TBC Bank and Hardide PLC

-0.55

Correlation Coefficient

TBC Bank  Hardide PLC

Excellent diversification

The 3 months correlation between TBC and Hardide is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding TBC Bank Group and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC and TBC Bank 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 TBC Bank Group are associated (or correlated) with Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of TBC Bank i.e., TBC Bank and Hardide PLC go up and down completely randomly.

Pair Corralation between TBC Bank and Hardide PLC

Assuming the 90 days trading horizon TBC Bank is expected to generate 11.62 times less return on investment than Hardide PLC. But when comparing it to its historical volatility, TBC Bank Group is 5.11 times less risky than Hardide PLC. It trades about 0.07 of its potential returns per unit of risk. Hardide PLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  475.00  in Hardide PLC on October 8, 2024 and sell it today you would earn a total of  88.00  from holding Hardide PLC or generate 18.53% return on investment over 90 days.

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

TBC Bank Group  vs.  Hardide PLC

TBC Bank Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TBC Bank Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, TBC Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hardide PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hardide PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hardide PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TBC Bank and Hardide PLC

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

The idea behind TBC Bank Group and Hardide 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.