Correlation Between STI and BIT Computer
Can any of the company-specific risk be diversified away by investing in both STI and BIT Computer 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 STI and BIT Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STI Co and BIT Computer Co, you can compare the effects of market volatilities on STI and BIT Computer 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 STI with a short position of BIT Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of STI and BIT Computer.
Diversification Opportunities for STI and BIT Computer
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STI and BIT is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding STI Co and BIT Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIT Computer and STI 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 STI Co are associated (or correlated) with BIT Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIT Computer has no effect on the direction of STI i.e., STI and BIT Computer go up and down completely randomly.
Pair Corralation between STI and BIT Computer
Assuming the 90 days trading horizon STI Co is expected to under-perform the BIT Computer. In addition to that, STI is 2.01 times more volatile than BIT Computer Co. It trades about -0.51 of its total potential returns per unit of risk. BIT Computer Co is currently generating about 0.06 per unit of volatility. If you would invest 492,000 in BIT Computer Co on September 2, 2024 and sell it today you would earn a total of 9,000 from holding BIT Computer Co or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STI Co vs. BIT Computer Co
Performance |
| Timeline |
| STI Co |
| BIT Computer |
STI and BIT Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STI and BIT Computer
The main advantage of trading using opposite STI and BIT Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STI position performs unexpectedly, BIT Computer 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 BIT Computer will offset losses from the drop in BIT Computer's long position.| STI vs. Dongsin Engineering Construction | STI vs. Doosan Fuel Cell | STI vs. Daishin Balance 1 | STI vs. Total Soft Bank |
| BIT Computer vs. Daejung Chemicals Metals | BIT Computer vs. Koryo Credit Information | BIT Computer vs. System and Application | BIT Computer vs. Shinsegae Information Communication |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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