Correlation Between Ecoplastic and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Ecoplastic and BGF Retail 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 Ecoplastic and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecoplastic and BGF Retail Co, you can compare the effects of market volatilities on Ecoplastic and BGF Retail 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 Ecoplastic with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecoplastic and BGF Retail.
Diversification Opportunities for Ecoplastic and BGF Retail
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecoplastic and BGF is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ecoplastic and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Ecoplastic 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 Ecoplastic are associated (or correlated) with BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of Ecoplastic i.e., Ecoplastic and BGF Retail go up and down completely randomly.
Pair Corralation between Ecoplastic and BGF Retail
Assuming the 90 days trading horizon Ecoplastic is expected to under-perform the BGF Retail. But the stock apears to be less risky and, when comparing its historical volatility, Ecoplastic is 1.19 times less risky than BGF Retail. The stock trades about -0.23 of its potential returns per unit of risk. The BGF Retail Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 11,200,000 in BGF Retail Co on August 29, 2024 and sell it today you would lose (500,000) from holding BGF Retail Co or give up 4.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ecoplastic vs. BGF Retail Co
Performance |
| Timeline |
| Ecoplastic |
| BGF Retail |
Ecoplastic and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecoplastic and BGF Retail
The main advantage of trading using opposite Ecoplastic and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecoplastic position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail's long position.| Ecoplastic vs. KMH Hitech Co | Ecoplastic vs. GemVaxKAEL CoLtd | Ecoplastic vs. Busan Industrial Co | Ecoplastic vs. Busan Ind |
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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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