Correlation Between Arctic Blue and TF Bank

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

By analyzing existing cross correlation between Arctic Blue Beverages and TF Bank AB, you can compare the effects of market volatilities on Arctic Blue and TF Bank 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 Arctic Blue with a short position of TF Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Blue and TF Bank.

Diversification Opportunities for Arctic Blue and TF Bank

-0.92

Correlation Coefficient

Arctic Blue  TF Bank

Pay attention - limited upside

The 3 months correlation between Arctic and TFBANK is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Blue Beverages and TF Bank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TF Bank AB and Arctic Blue 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 Arctic Blue Beverages are associated (or correlated) with TF Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TF Bank AB has no effect on the direction of Arctic Blue i.e., Arctic Blue and TF Bank go up and down completely randomly.

Pair Corralation between Arctic Blue and TF Bank

Assuming the 90 days trading horizon Arctic Blue Beverages is expected to under-perform the TF Bank. In addition to that, Arctic Blue is 1.48 times more volatile than TF Bank AB. It trades about -0.31 of its total potential returns per unit of risk. TF Bank AB is currently generating about 0.22 per unit of volatility. If you would invest  26,000  in TF Bank AB on September 12, 2024 and sell it today you would earn a total of  9,000  from holding TF Bank AB or generate 34.62% return on investment over 90 days.

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

Arctic Blue Beverages  vs.  TF Bank AB

Arctic Blue Beverages

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arctic Blue Beverages 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 indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

TF Bank AB

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TF Bank AB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, TF Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arctic Blue and TF Bank

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

The idea behind Arctic Blue Beverages and TF Bank AB 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.