Correlation Between Kendrion and Tetragon Financial

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

By analyzing existing cross correlation between Kendrion NV and Tetragon Financial Group, you can compare the effects of market volatilities on Kendrion and Tetragon Financial 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 Kendrion with a short position of Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kendrion and Tetragon Financial.

Diversification Opportunities for Kendrion and Tetragon Financial

-0.8

Correlation Coefficient

Kendrion  Tetragon Financial

Pay attention - limited upside

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

Pair Corralation between Kendrion and Tetragon Financial

Assuming the 90 days trading horizon Kendrion NV is expected to under-perform the Tetragon Financial. But the stock apears to be less risky and, when comparing its historical volatility, Kendrion NV is 1.08 times less risky than Tetragon Financial. The stock trades about -0.1 of its potential returns per unit of risk. The Tetragon Financial Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,260  in Tetragon Financial Group on September 19, 2024 and sell it today you would earn a total of  140.00  from holding Tetragon Financial Group or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	86.96%
Values	Daily Returns

Kendrion NV  vs.  Tetragon Financial Group

Kendrion NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kendrion NV 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 basic 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.

Tetragon Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Tetragon Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kendrion and Tetragon Financial

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

The idea behind Kendrion NV and Tetragon Financial Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.