Correlation Between TPG Telecom and Bell Financial

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

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

Diversification Opportunities for TPG Telecom and Bell Financial

-0.23

Correlation Coefficient

TPG Telecom  Bell Financial

Very good diversification

The 3 months correlation between TPG and Bell is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding TPG Telecom and Bell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Financial Group and TPG Telecom 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 TPG Telecom are associated (or correlated) with Bell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Financial Group has no effect on the direction of TPG Telecom i.e., TPG Telecom and Bell Financial go up and down completely randomly.

Pair Corralation between TPG Telecom and Bell Financial

Assuming the 90 days trading horizon TPG Telecom is expected to generate 1.15 times more return on investment than Bell Financial. However, TPG Telecom is 1.15 times more volatile than Bell Financial Group. It trades about 0.19 of its potential returns per unit of risk. Bell Financial Group is currently generating about -0.09 per unit of risk. If you would invest  428.00  in TPG Telecom on December 10, 2024 and sell it today you would earn a total of  21.00  from holding TPG Telecom or generate 4.91% return on investment over 90 days.

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

TPG Telecom  vs.  Bell Financial Group

TPG Telecom

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Telecom are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, TPG Telecom is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bell Financial Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bell Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Bell Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TPG Telecom and Bell Financial

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

The idea behind TPG Telecom and Bell Financial Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.