Correlation Between Twin Ridge and Popular

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

By analyzing existing cross correlation between Twin Ridge Capital and Popular, you can compare the effects of market volatilities on Twin Ridge and Popular 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 Twin Ridge with a short position of Popular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twin Ridge and Popular.

Diversification Opportunities for Twin Ridge and Popular

0.0

Correlation Coefficient

Twin Ridge  Popular

Pay attention - limited upside

The 3 months correlation between Twin and Popular is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Twin Ridge Capital and Popular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular and Twin Ridge 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 Twin Ridge Capital are associated (or correlated) with Popular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular has no effect on the direction of Twin Ridge i.e., Twin Ridge and Popular go up and down completely randomly.

Pair Corralation between Twin Ridge and Popular

If you would invest  2,460  in Popular on December 28, 2024 and sell it today you would lose (5.00) from holding Popular or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Twin Ridge Capital  vs.  Popular

Twin Ridge Capital

Risk-Adjusted Performance

Very Weak

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

Popular

Risk-Adjusted Performance

Weak

Over the last 90 days Popular has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Popular is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Twin Ridge and Popular

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

The idea behind Twin Ridge Capital and Popular 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.