Correlation Between TGCC SA and SALAFIN

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

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

Diversification Opportunities for TGCC SA and SALAFIN

0.34

Correlation Coefficient

TGCC SA  SALAFIN

Weak diversification

The 3 months correlation between TGCC and SALAFIN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding TGCC SA and SALAFIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALAFIN and TGCC SA 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 TGCC SA are associated (or correlated) with SALAFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALAFIN has no effect on the direction of TGCC SA i.e., TGCC SA and SALAFIN go up and down completely randomly.

Pair Corralation between TGCC SA and SALAFIN

Assuming the 90 days trading horizon TGCC SA is expected to generate 0.88 times more return on investment than SALAFIN. However, TGCC SA is 1.13 times less risky than SALAFIN. It trades about 0.28 of its potential returns per unit of risk. SALAFIN is currently generating about 0.05 per unit of risk. If you would invest  46,945  in TGCC SA on December 23, 2024 and sell it today you would earn a total of  25,165  from holding TGCC SA or generate 53.61% return on investment over 90 days.

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

TGCC SA  vs.  SALAFIN

TGCC SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TGCC SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, TGCC SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

SALAFIN

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SALAFIN are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, SALAFIN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TGCC SA and SALAFIN

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

The idea behind TGCC SA and SALAFIN 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.