Correlation Between TPG Telecom and BKI Investment

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

By analyzing existing cross correlation between TPG Telecom and BKI Investment, you can compare the effects of market volatilities on TPG Telecom and BKI Investment 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 BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG Telecom and BKI Investment.

Diversification Opportunities for TPG Telecom and BKI Investment

-0.34

Correlation Coefficient

TPG Telecom  BKI Investment

Very good diversification

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

Pair Corralation between TPG Telecom and BKI Investment

Assuming the 90 days trading horizon TPG Telecom is expected to generate 1.84 times more return on investment than BKI Investment. However, TPG Telecom is 1.84 times more volatile than BKI Investment. It trades about 0.14 of its potential returns per unit of risk. BKI Investment is currently generating about -0.01 per unit of risk. If you would invest  437.00  in TPG Telecom on December 25, 2024 and sell it today you would earn a total of  60.00  from holding TPG Telecom or generate 13.73% 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.  BKI Investment

TPG Telecom

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Telecom are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, TPG Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

BKI Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days BKI Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, BKI Investment 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 BKI Investment

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

The idea behind TPG Telecom and BKI Investment 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.