Correlation Between Tetragon Financial and ASR Nederland

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

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

Diversification Opportunities for Tetragon Financial and ASR Nederland

0.44

Correlation Coefficient

Tetragon Financial  ASR Nederland

Very weak diversification

The 3 months correlation between Tetragon and ASR is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and ASR Nederland NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASR Nederland NV and Tetragon Financial 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 Tetragon Financial Group are associated (or correlated) with ASR Nederland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASR Nederland NV has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and ASR Nederland go up and down completely randomly.

Pair Corralation between Tetragon Financial and ASR Nederland

Assuming the 90 days trading horizon Tetragon Financial is expected to generate 2.77 times less return on investment than ASR Nederland. But when comparing it to its historical volatility, Tetragon Financial Group is 1.45 times less risky than ASR Nederland. It trades about 0.02 of its potential returns per unit of risk. ASR Nederland NV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,372  in ASR Nederland NV on March 21, 2024 and sell it today you would earn a total of  1,052  from holding ASR Nederland NV or generate 31.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.67%
Values	Daily Returns

Tetragon Financial Group  vs.  ASR Nederland NV

Tetragon Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Tetragon Financial may actually be approaching a critical reversion point that can send shares even higher in July 2024.

ASR Nederland NV

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASR Nederland NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, ASR Nederland is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tetragon Financial and ASR Nederland

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

The idea behind Tetragon Financial Group and ASR Nederland NV 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.