Correlation Between Total Soft and BH
Can any of the company-specific risk be diversified away by investing in both Total Soft 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 Total Soft and BH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and BH Co, you can compare the effects of market volatilities on Total Soft 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 Total Soft with a short position of BH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and BH.
Diversification Opportunities for Total Soft and BH
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Total and BH is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and BH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Co and Total Soft 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 Total Soft Bank 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 Total Soft i.e., Total Soft and BH go up and down completely randomly.
Pair Corralation between Total Soft and BH
Assuming the 90 days trading horizon Total Soft Bank is expected to under-perform the BH. In addition to that, Total Soft is 2.56 times more volatile than BH Co. It trades about -0.06 of its total potential returns per unit of risk. BH Co is currently generating about -0.04 per unit of volatility. If you would invest 1,644,000 in BH Co on September 4, 2024 and sell it today you would lose (53,000) from holding BH Co or give up 3.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. BH Co
Performance |
| Timeline |
| Total Soft Bank |
| BH Co |
Total Soft and BH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and BH
The main advantage of trading using opposite Total Soft and BH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft 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.| Total Soft vs. Alton Sports CoLtd | Total Soft vs. Kyung In Synthetic Corp | Total Soft vs. Shinhan Inverse Silver | Total Soft vs. Cuckoo Homesys Co |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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