Correlation Between TG Venture and Fat Projects

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

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

Diversification Opportunities for TG Venture and Fat Projects

0.16

Correlation Coefficient

TG Venture  Fat Projects

Average diversification

The 3 months correlation between TGVC and Fat is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding TG Venture Acquisition and Fat Projects Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fat Projects Acquisition and TG Venture 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 TG Venture Acquisition are associated (or correlated) with Fat Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fat Projects Acquisition has no effect on the direction of TG Venture i.e., TG Venture and Fat Projects go up and down completely randomly.

Pair Corralation between TG Venture and Fat Projects

Given the investment horizon of 90 days TG Venture is expected to generate 75.9 times less return on investment than Fat Projects. But when comparing it to its historical volatility, TG Venture Acquisition is 55.86 times less risky than Fat Projects. It trades about 0.07 of its potential returns per unit of risk. Fat Projects Acquisition is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3.93  in Fat Projects Acquisition on October 7, 2024 and sell it today you would earn a total of  0.86  from holding Fat Projects Acquisition or generate 21.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.21%
Values	Daily Returns

TG Venture Acquisition  vs.  Fat Projects Acquisition

TG Venture Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fat Projects Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fat Projects Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fat Projects is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with TG Venture and Fat Projects

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

The idea behind TG Venture Acquisition and Fat Projects Acquisition 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.