Correlation Between TPI Polene and Aqua Public

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

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

Diversification Opportunities for TPI Polene and Aqua Public

0.58

Correlation Coefficient

TPI Polene  Aqua Public

Very weak diversification

The 3 months correlation between TPI and Aqua is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding TPI Polene Public and Aqua Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Public and TPI Polene 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 TPI Polene Public are associated (or correlated) with Aqua Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Public has no effect on the direction of TPI Polene i.e., TPI Polene and Aqua Public go up and down completely randomly.

Pair Corralation between TPI Polene and Aqua Public

Assuming the 90 days trading horizon TPI Polene Public is expected to under-perform the Aqua Public. But the stock apears to be less risky and, when comparing its historical volatility, TPI Polene Public is 2.11 times less risky than Aqua Public. The stock trades about -0.14 of its potential returns per unit of risk. The Aqua Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Aqua Public on September 15, 2024 and sell it today you would lose (1.00) from holding Aqua Public or give up 2.86% of portfolio value over 90 days.

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

TPI Polene Public  vs.  Aqua Public

TPI Polene Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TPI Polene Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aqua Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqua Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Aqua Public is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TPI Polene and Aqua Public

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

The idea behind TPI Polene Public and Aqua Public 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.