Correlation Between Cloud Air and BBC
Can any of the company-specific risk be diversified away by investing in both Cloud Air and BBC 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 Cloud Air and BBC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloud Air CoLtd and BBC Co, you can compare the effects of market volatilities on Cloud Air and BBC 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 Cloud Air with a short position of BBC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloud Air and BBC.
Diversification Opportunities for Cloud Air and BBC
Significant diversification
The 3 months correlation between Cloud and BBC is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cloud Air CoLtd and BBC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBC Co and Cloud Air 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 Cloud Air CoLtd are associated (or correlated) with BBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBC Co has no effect on the direction of Cloud Air i.e., Cloud Air and BBC go up and down completely randomly.
Pair Corralation between Cloud Air and BBC
Assuming the 90 days trading horizon Cloud Air CoLtd is expected to generate 1.07 times more return on investment than BBC. However, Cloud Air is 1.07 times more volatile than BBC Co. It trades about 0.38 of its potential returns per unit of risk. BBC Co is currently generating about 0.08 per unit of risk. If you would invest 84,000 in Cloud Air CoLtd on November 27, 2024 and sell it today you would earn a total of 7,600 from holding Cloud Air CoLtd or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloud Air CoLtd vs. BBC Co
Performance |
| Timeline |
| Cloud Air CoLtd |
| BBC Co |
Cloud Air and BBC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloud Air and BBC
The main advantage of trading using opposite Cloud Air and BBC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloud Air position performs unexpectedly, BBC 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 BBC will offset losses from the drop in BBC's long position.| Cloud Air vs. Dongil Metal Co | Cloud Air vs. Miwon Chemicals Co | Cloud Air vs. Finebesteel | Cloud Air vs. Dongil Steel Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |