Correlation Between TPI Polene and XSpring Capital

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

By analyzing existing cross correlation between TPI Polene Power and XSpring Capital Public, you can compare the effects of market volatilities on TPI Polene and XSpring Capital 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 XSpring Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPI Polene and XSpring Capital.

Diversification Opportunities for TPI Polene and XSpring Capital

0.79

Correlation Coefficient

TPI Polene  XSpring Capital

Poor diversification

The 3 months correlation between TPI and XSpring is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding TPI Polene Power and XSpring Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XSpring Capital 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 Power are associated (or correlated) with XSpring Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XSpring Capital Public has no effect on the direction of TPI Polene i.e., TPI Polene and XSpring Capital go up and down completely randomly.

Pair Corralation between TPI Polene and XSpring Capital

Assuming the 90 days trading horizon TPI Polene Power is expected to under-perform the XSpring Capital. But the stock apears to be less risky and, when comparing its historical volatility, TPI Polene Power is 1.26 times less risky than XSpring Capital. The stock trades about -0.22 of its potential returns per unit of risk. The XSpring Capital Public is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  91.00  in XSpring Capital Public on December 30, 2024 and sell it today you would lose (11.00) from holding XSpring Capital Public or give up 12.09% of portfolio value over 90 days.

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

TPI Polene Power  vs.  XSpring Capital Public

TPI Polene Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPI Polene Power 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.

XSpring Capital Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days XSpring Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with TPI Polene and XSpring Capital

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

The idea behind TPI Polene Power and XSpring Capital 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.