Correlation Between TPL Plastech and UFLEX

Can any of the company-specific risk be diversified away by investing in both TPL Plastech and UFLEX 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 UFLEX 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 UFLEX Limited, you can compare the effects of market volatilities on TPL Plastech and UFLEX 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 UFLEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Plastech and UFLEX.

Diversification Opportunities for TPL Plastech and UFLEX

0.83

Correlation Coefficient

TPL Plastech  UFLEX

Very poor diversification

The 3 months correlation between TPL and UFLEX is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TPL Plastech Limited and UFLEX Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFLEX Limited 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 UFLEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFLEX Limited has no effect on the direction of TPL Plastech i.e., TPL Plastech and UFLEX go up and down completely randomly.

Pair Corralation between TPL Plastech and UFLEX

Assuming the 90 days trading horizon TPL Plastech Limited is expected to generate 0.85 times more return on investment than UFLEX. However, TPL Plastech Limited is 1.18 times less risky than UFLEX. It trades about -0.03 of its potential returns per unit of risk. UFLEX Limited is currently generating about -0.22 per unit of risk. If you would invest  11,168  in TPL Plastech Limited on August 31, 2024 and sell it today you would lose (497.00) from holding TPL Plastech Limited or give up 4.45% 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.  UFLEX Limited

TPL Plastech Limited

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, TPL Plastech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

UFLEX Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UFLEX Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with TPL Plastech and UFLEX

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

The idea behind TPL Plastech Limited and UFLEX Limited 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.