Correlation Between RPBio and BGF Retail
Can any of the company-specific risk be diversified away by investing in both RPBio 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 RPBio and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RPBio Inc and BGF Retail Co, you can compare the effects of market volatilities on RPBio 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 RPBio with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPBio and BGF Retail.
Diversification Opportunities for RPBio and BGF Retail
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RPBio and BGF is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding RPBio Inc and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and RPBio 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 RPBio Inc 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 RPBio i.e., RPBio and BGF Retail go up and down completely randomly.
Pair Corralation between RPBio and BGF Retail
Assuming the 90 days trading horizon RPBio Inc is expected to under-perform the BGF Retail. In addition to that, RPBio is 1.43 times more volatile than BGF Retail Co. It trades about -0.11 of its total potential returns per unit of risk. BGF Retail Co is currently generating about 0.0 per unit of volatility. If you would invest 10,420,000 in BGF Retail Co on October 26, 2024 and sell it today you would lose (130,000) from holding BGF Retail Co or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RPBio Inc vs. BGF Retail Co
Performance |
| Timeline |
| RPBio Inc |
| BGF Retail |
RPBio and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RPBio and BGF Retail
The main advantage of trading using opposite RPBio and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPBio 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.| RPBio vs. Alton Sports CoLtd | RPBio vs. Samlip General Foods | RPBio vs. Korea Air Svc | RPBio vs. Air Busan Co |
| BGF Retail vs. Busan Industrial Co | BGF Retail vs. Busan Ind | BGF Retail vs. RPBio Inc | BGF Retail vs. Finebesteel |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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