Correlation Between Ba Ria and TDG Global

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

By analyzing existing cross correlation between Ba Ria Thermal and TDG Global Investment, you can compare the effects of market volatilities on Ba Ria and TDG Global 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 Ba Ria with a short position of TDG Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ba Ria and TDG Global.

Diversification Opportunities for Ba Ria and TDG Global

0.8

Correlation Coefficient

Ba Ria  TDG Global

Very poor diversification

The 3 months correlation between BTP and TDG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ba Ria Thermal and TDG Global Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDG Global Investment and Ba Ria 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 Ba Ria Thermal are associated (or correlated) with TDG Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDG Global Investment has no effect on the direction of Ba Ria i.e., Ba Ria and TDG Global go up and down completely randomly.

Pair Corralation between Ba Ria and TDG Global

Assuming the 90 days trading horizon Ba Ria is expected to generate 2.86 times less return on investment than TDG Global. But when comparing it to its historical volatility, Ba Ria Thermal is 1.52 times less risky than TDG Global. It trades about 0.02 of its potential returns per unit of risk. TDG Global Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  257,576  in TDG Global Investment on September 14, 2024 and sell it today you would earn a total of  106,424  from holding TDG Global Investment or generate 41.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.19%
Values	Daily Returns

Ba Ria Thermal  vs.  TDG Global Investment

Ba Ria Thermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ba Ria Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

TDG Global Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ba Ria and TDG Global

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

The idea behind Ba Ria Thermal and TDG Global Investment 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.