Correlation Between TBC Bank and OneSavings Bank

Can any of the company-specific risk be diversified away by investing in both TBC Bank and OneSavings Bank 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 OneSavings Bank 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 OneSavings Bank PLC, you can compare the effects of market volatilities on TBC Bank and OneSavings Bank 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 OneSavings Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBC Bank and OneSavings Bank.

Diversification Opportunities for TBC Bank and OneSavings Bank

0.87

Correlation Coefficient

TBC Bank  OneSavings Bank

Very poor diversification

The 3 months correlation between TBC and OneSavings is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding TBC Bank Group and OneSavings Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSavings Bank 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 OneSavings Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSavings Bank PLC has no effect on the direction of TBC Bank i.e., TBC Bank and OneSavings Bank go up and down completely randomly.

Pair Corralation between TBC Bank and OneSavings Bank

Assuming the 90 days trading horizon TBC Bank Group is expected to generate 1.1 times more return on investment than OneSavings Bank. However, TBC Bank is 1.1 times more volatile than OneSavings Bank PLC. It trades about 0.26 of its potential returns per unit of risk. OneSavings Bank PLC is currently generating about 0.14 per unit of risk. If you would invest  314,500  in TBC Bank Group on December 24, 2024 and sell it today you would earn a total of  126,500  from holding TBC Bank Group or generate 40.22% return on investment over 90 days.

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

TBC Bank Group  vs.  OneSavings Bank PLC

TBC Bank Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TBC Bank Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TBC Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

OneSavings Bank PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OneSavings Bank PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, OneSavings Bank exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TBC Bank and OneSavings Bank

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

The idea behind TBC Bank Group and OneSavings Bank 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.