Correlation Between TPL Plastech and EID Parry

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

By analyzing existing cross correlation between TPL Plastech Limited and EID Parry India, you can compare the effects of market volatilities on TPL Plastech and EID Parry 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 TPL Plastech with a short position of EID Parry. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Plastech and EID Parry.

Diversification Opportunities for TPL Plastech and EID Parry

0.81

Correlation Coefficient

TPL Plastech  EID Parry

Very poor diversification

The 3 months correlation between TPL and EID is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding TPL Plastech Limited and EID Parry India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EID Parry India and TPL Plastech 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 TPL Plastech Limited are associated (or correlated) with EID Parry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EID Parry India has no effect on the direction of TPL Plastech i.e., TPL Plastech and EID Parry go up and down completely randomly.

Pair Corralation between TPL Plastech and EID Parry

Assuming the 90 days trading horizon TPL Plastech Limited is expected to under-perform the EID Parry. In addition to that, TPL Plastech is 1.14 times more volatile than EID Parry India. It trades about -0.09 of its total potential returns per unit of risk. EID Parry India is currently generating about -0.08 per unit of volatility. If you would invest  82,225  in EID Parry India on November 20, 2024 and sell it today you would lose (10,305) from holding EID Parry India or give up 12.53% of portfolio value over 90 days.

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

TPL Plastech Limited  vs.  EID Parry India

TPL Plastech Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPL Plastech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EID Parry India

Risk-Adjusted Performance

Very Weak

Over the last 90 days EID Parry India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with TPL Plastech and EID Parry

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

The idea behind TPL Plastech Limited and EID Parry India 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.