Correlation Between TNB and DAT

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

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

Diversification Opportunities for TNB and DAT

-0.65

Correlation Coefficient

TNB  DAT

Excellent diversification

The 3 months correlation between TNB and DAT is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding TNB and DAT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAT and TNB 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 TNB are associated (or correlated) with DAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAT has no effect on the direction of TNB i.e., TNB and DAT go up and down completely randomly.

Pair Corralation between TNB and DAT

If you would invest  0.00  in DAT on January 28, 2024 and sell it today you would earn a total of  0.00  from holding DAT or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

TNB  vs.  DAT

TNB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TNB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, TNB exhibited solid returns over the last few months and may actually be approaching a breakup point.

DAT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DAT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, DAT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TNB and DAT

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

The idea behind TNB and DAT 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.