Correlation Between BH and Wireless Power
Can any of the company-specific risk be diversified away by investing in both BH and Wireless Power 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 BH and Wireless Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BH Co and Wireless Power Amplifier, you can compare the effects of market volatilities on BH and Wireless Power 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 BH with a short position of Wireless Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of BH and Wireless Power.
Diversification Opportunities for BH and Wireless Power
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BH and Wireless is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BH Co and Wireless Power Amplifier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wireless Power Amplifier and BH 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 BH Co are associated (or correlated) with Wireless Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wireless Power Amplifier has no effect on the direction of BH i.e., BH and Wireless Power go up and down completely randomly.
Pair Corralation between BH and Wireless Power
Assuming the 90 days trading horizon BH Co is expected to under-perform the Wireless Power. But the stock apears to be less risky and, when comparing its historical volatility, BH Co is 4.16 times less risky than Wireless Power. The stock trades about -0.56 of its potential returns per unit of risk. The Wireless Power Amplifier is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 279,000 in Wireless Power Amplifier on November 5, 2024 and sell it today you would earn a total of 195,000 from holding Wireless Power Amplifier or generate 69.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BH Co vs. Wireless Power Amplifier
Performance |
| Timeline |
| BH Co |
| Wireless Power Amplifier |
BH and Wireless Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BH and Wireless Power
The main advantage of trading using opposite BH and Wireless Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BH position performs unexpectedly, Wireless Power 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 Wireless Power will offset losses from the drop in Wireless Power's long position.The idea behind BH Co and Wireless Power Amplifier pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Wireless Power vs. Sempio Foods Co | Wireless Power vs. Jinro Distillers Co | Wireless Power vs. Samsung Life Insurance | Wireless Power vs. Hanjin Transportation 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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