Correlation Between TPC Power and BGrimm Power

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

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

Diversification Opportunities for TPC Power and BGrimm Power

0.9

Correlation Coefficient

TPC Power  BGrimm Power

Almost no diversification

The 3 months correlation between TPC and BGrimm is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding TPC Power Holding and BGrimm Power Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGrimm Power Public and TPC Power 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 TPC Power Holding are associated (or correlated) with BGrimm Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGrimm Power Public has no effect on the direction of TPC Power i.e., TPC Power and BGrimm Power go up and down completely randomly.

Pair Corralation between TPC Power and BGrimm Power

Assuming the 90 days trading horizon TPC Power Holding is expected to generate 0.6 times more return on investment than BGrimm Power. However, TPC Power Holding is 1.67 times less risky than BGrimm Power. It trades about -0.4 of its potential returns per unit of risk. BGrimm Power Public is currently generating about -0.25 per unit of risk. If you would invest  567.00  in TPC Power Holding on October 24, 2024 and sell it today you would lose (159.00) from holding TPC Power Holding or give up 28.04% of portfolio value over 90 days.

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

TPC Power Holding  vs.  BGrimm Power Public

TPC Power Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TPC Power Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BGrimm Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGrimm Power Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TPC Power and BGrimm Power

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

The idea behind TPC Power Holding and BGrimm Power Public 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.