Correlation Between Tetragon Financial and TP ICAP

Can any of the company-specific risk be diversified away by investing in both Tetragon Financial and TP ICAP 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 TP ICAP 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 TP ICAP Group, you can compare the effects of market volatilities on Tetragon Financial and TP ICAP 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 TP ICAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetragon Financial and TP ICAP.

Diversification Opportunities for Tetragon Financial and TP ICAP

0.76

Correlation Coefficient

Tetragon Financial  TP ICAP

Poor diversification

The 3 months correlation between Tetragon and TCAP is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and TP ICAP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TP ICAP Group 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 TP ICAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TP ICAP Group has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and TP ICAP go up and down completely randomly.

Pair Corralation between Tetragon Financial and TP ICAP

Assuming the 90 days trading horizon Tetragon Financial is expected to generate 1.04 times less return on investment than TP ICAP. In addition to that, Tetragon Financial is 1.19 times more volatile than TP ICAP Group. It trades about 0.22 of its total potential returns per unit of risk. TP ICAP Group is currently generating about 0.27 per unit of volatility. If you would invest  25,000  in TP ICAP Group on April 24, 2025 and sell it today you would earn a total of  5,650  from holding TP ICAP Group or generate 22.6% return on investment over 90 days.

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

Tetragon Financial Group  vs.  TP ICAP Group

Tetragon Financial

Risk-Adjusted Performance

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 rather uncertain technical and fundamental indicators, Tetragon Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

TP ICAP Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TP ICAP Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, TP ICAP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tetragon Financial and TP ICAP

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

The idea behind Tetragon Financial Group and TP ICAP 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.