Correlation Between Tetragon Financial and Judges Scientific

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

By analyzing existing cross correlation between Tetragon Financial Group and Judges Scientific Plc, you can compare the effects of market volatilities on Tetragon Financial and Judges Scientific 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 Tetragon Financial with a short position of Judges Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetragon Financial and Judges Scientific.

Diversification Opportunities for Tetragon Financial and Judges Scientific

-0.32

Correlation Coefficient

Tetragon Financial  Judges Scientific

Very good diversification

The 3 months correlation between Tetragon and Judges is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and Judges Scientific Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Judges Scientific Plc and Tetragon Financial 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 Tetragon Financial Group are associated (or correlated) with Judges Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Judges Scientific Plc has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and Judges Scientific go up and down completely randomly.

Pair Corralation between Tetragon Financial and Judges Scientific

Assuming the 90 days trading horizon Tetragon Financial Group is expected to generate 0.39 times more return on investment than Judges Scientific. However, Tetragon Financial Group is 2.6 times less risky than Judges Scientific. It trades about 0.11 of its potential returns per unit of risk. Judges Scientific Plc is currently generating about -0.18 per unit of risk. If you would invest  1,415  in Tetragon Financial Group on October 11, 2024 and sell it today you would earn a total of  15.00  from holding Tetragon Financial Group or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Tetragon Financial Group  vs.  Judges Scientific Plc

Tetragon Financial

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tetragon Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Judges Scientific Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Judges Scientific Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Tetragon Financial and Judges Scientific

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

The idea behind Tetragon Financial Group and Judges Scientific 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.