Correlation Between TPI Polene and BTS Group

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

By analyzing existing cross correlation between TPI Polene Power and BTS Group Holdings, you can compare the effects of market volatilities on TPI Polene and BTS Group 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 BTS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPI Polene and BTS Group.

Diversification Opportunities for TPI Polene and BTS Group

-0.74

Correlation Coefficient

TPI Polene  BTS Group

Pay attention - limited upside

The 3 months correlation between TPI and BTS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding TPI Polene Power and BTS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group Holdings 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 Power are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group Holdings has no effect on the direction of TPI Polene i.e., TPI Polene and BTS Group go up and down completely randomly.

Pair Corralation between TPI Polene and BTS Group

Assuming the 90 days trading horizon TPI Polene Power is expected to under-perform the BTS Group. But the stock apears to be less risky and, when comparing its historical volatility, TPI Polene Power is 2.38 times less risky than BTS Group. The stock trades about -0.08 of its potential returns per unit of risk. The BTS Group Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  450.00  in BTS Group Holdings on September 26, 2024 and sell it today you would earn a total of  115.00  from holding BTS Group Holdings or generate 25.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

TPI Polene Power  vs.  BTS Group Holdings

TPI Polene Power

Risk-Adjusted Performance

0 of 100

Very Weak

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

BTS Group Holdings

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, BTS Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TPI Polene and BTS Group

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

The idea behind TPI Polene Power and BTS Group Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.