Correlation Between Turning Point and Porvair Plc

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

By analyzing existing cross correlation between Turning Point Brands and Porvair plc, you can compare the effects of market volatilities on Turning Point and Porvair 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 Turning Point with a short position of Porvair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Porvair Plc.

Diversification Opportunities for Turning Point and Porvair Plc

0.54

Correlation Coefficient

Turning Point  Porvair Plc

Very weak diversification

The 3 months correlation between Turning and Porvair is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Porvair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porvair plc and Turning Point 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 Turning Point Brands are associated (or correlated) with Porvair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porvair plc has no effect on the direction of Turning Point i.e., Turning Point and Porvair Plc go up and down completely randomly.

Pair Corralation between Turning Point and Porvair Plc

Considering the 90-day investment horizon Turning Point Brands is expected to under-perform the Porvair Plc. In addition to that, Turning Point is 2.3 times more volatile than Porvair plc. It trades about -0.11 of its total potential returns per unit of risk. Porvair plc is currently generating about 0.27 per unit of volatility. If you would invest  881.00  in Porvair plc on September 22, 2024 and sell it today you would earn a total of  39.00  from holding Porvair plc or generate 4.43% return on investment over 90 days.

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

Turning Point Brands  vs.  Porvair plc

Turning Point Brands

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Turning Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Porvair plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Porvair plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Porvair Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Turning Point and Porvair Plc

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

The idea behind Turning Point Brands and Porvair 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.