Correlation Between Tarapur Transformers and TVS

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

By analyzing existing cross correlation between Tarapur Transformers Limited and TVS Motor, you can compare the effects of market volatilities on Tarapur Transformers and TVS 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 Tarapur Transformers with a short position of TVS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tarapur Transformers and TVS.

Diversification Opportunities for Tarapur Transformers and TVS

-0.25

Correlation Coefficient

Tarapur Transformers  TVS

Very good diversification

The 3 months correlation between Tarapur and TVS is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Tarapur Transformers Limited and TVS Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TVS Motor and Tarapur Transformers 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 Tarapur Transformers Limited are associated (or correlated) with TVS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TVS Motor has no effect on the direction of Tarapur Transformers i.e., Tarapur Transformers and TVS go up and down completely randomly.

Pair Corralation between Tarapur Transformers and TVS

Assuming the 90 days trading horizon Tarapur Transformers Limited is expected to generate 2.84 times more return on investment than TVS. However, Tarapur Transformers is 2.84 times more volatile than TVS Motor. It trades about 0.14 of its potential returns per unit of risk. TVS Motor is currently generating about 0.22 per unit of risk. If you would invest  2,537  in Tarapur Transformers Limited on April 3, 2025 and sell it today you would earn a total of  210.00  from holding Tarapur Transformers Limited or generate 8.28% return on investment over 90 days.

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

Tarapur Transformers Limited  vs.  TVS Motor

Tarapur Transformers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tarapur Transformers Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in August 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

TVS Motor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TVS Motor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, TVS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tarapur Transformers and TVS

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

The idea behind Tarapur Transformers Limited and TVS Motor 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.