Correlation Between Silver Ridge and British American
Can any of the company-specific risk be diversified away by investing in both Silver Ridge and British American 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 Silver Ridge and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Ridge Holdings and British American Tobacco, you can compare the effects of market volatilities on Silver Ridge and British American 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 Silver Ridge with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Ridge and British American.
Diversification Opportunities for Silver Ridge and British American
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Silver and British is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Silver Ridge Holdings and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Silver Ridge 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 Silver Ridge Holdings are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Silver Ridge i.e., Silver Ridge and British American go up and down completely randomly.
Pair Corralation between Silver Ridge and British American
Assuming the 90 days trading horizon Silver Ridge Holdings is expected to generate 1.89 times more return on investment than British American. However, Silver Ridge is 1.89 times more volatile than British American Tobacco. It trades about 0.47 of its potential returns per unit of risk. British American Tobacco is currently generating about -0.05 per unit of risk. If you would invest 50.00 in Silver Ridge Holdings on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Silver Ridge Holdings or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silver Ridge Holdings vs. British American Tobacco
Performance |
| Timeline |
| Silver Ridge Holdings |
| British American Tobacco |
Silver Ridge and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silver Ridge and British American
The main advantage of trading using opposite Silver Ridge and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Ridge position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Silver Ridge vs. Malayan Banking Bhd | Silver Ridge vs. Public Bank Bhd | Silver Ridge vs. Petronas Chemicals Group | Silver Ridge vs. Tenaga Nasional Bhd |
| British American vs. Senheng New Retail | British American vs. Media Prima Bhd | British American vs. Shangri La Hotels | British American vs. Sports Toto Berhad |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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