Correlation Between LEADCORP and BH
Can any of the company-specific risk be diversified away by investing in both LEADCORP and BH 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 LEADCORP and BH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The LEADCORP and BH Co, you can compare the effects of market volatilities on LEADCORP and BH 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 LEADCORP with a short position of BH. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEADCORP and BH.
Diversification Opportunities for LEADCORP and BH
Poor diversification
The 3 months correlation between LEADCORP and BH is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The LEADCORP and BH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Co and LEADCORP 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 The LEADCORP are associated (or correlated) with BH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Co has no effect on the direction of LEADCORP i.e., LEADCORP and BH go up and down completely randomly.
Pair Corralation between LEADCORP and BH
Assuming the 90 days trading horizon The LEADCORP is expected to under-perform the BH. But the stock apears to be less risky and, when comparing its historical volatility, The LEADCORP is 3.47 times less risky than BH. The stock trades about -0.13 of its potential returns per unit of risk. The BH Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,644,000 in BH Co on September 3, 2024 and sell it today you would lose (17,000) from holding BH Co or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The LEADCORP vs. BH Co
Performance |
| Timeline |
| LEADCORP |
| BH Co |
LEADCORP and BH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEADCORP and BH
The main advantage of trading using opposite LEADCORP and BH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEADCORP position performs unexpectedly, BH 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 BH will offset losses from the drop in BH's long position.The idea behind The LEADCORP and BH Co 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.| BH vs. Dongsin Engineering Construction | BH vs. Doosan Fuel Cell | BH vs. Daishin Balance 1 | BH vs. Total Soft Bank |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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