Correlation Between TPI Polene and Smart Concrete

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

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

Diversification Opportunities for TPI Polene and Smart Concrete

-0.18

Correlation Coefficient

TPI Polene  Smart Concrete

Good diversification

The 3 months correlation between TPI and Smart is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding TPI Polene Public and Smart Concrete Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Concrete Public and TPI Polene 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 TPI Polene Public are associated (or correlated) with Smart Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Concrete Public has no effect on the direction of TPI Polene i.e., TPI Polene and Smart Concrete go up and down completely randomly.

Pair Corralation between TPI Polene and Smart Concrete

Assuming the 90 days trading horizon TPI Polene Public is expected to generate 0.62 times more return on investment than Smart Concrete. However, TPI Polene Public is 1.6 times less risky than Smart Concrete. It trades about -0.03 of its potential returns per unit of risk. Smart Concrete Public is currently generating about -0.1 per unit of risk. If you would invest  103.00  in TPI Polene Public on December 22, 2024 and sell it today you would lose (4.00) from holding TPI Polene Public or give up 3.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

TPI Polene Public  vs.  Smart Concrete Public

TPI Polene Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPI Polene Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, TPI Polene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Smart Concrete Public

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TPI Polene and Smart Concrete

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

The idea behind TPI Polene Public and Smart Concrete 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.