Correlation Between British American and YX Precious
Can any of the company-specific risk be diversified away by investing in both British American and YX Precious 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 British American and YX Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and YX Precious Metals, you can compare the effects of market volatilities on British American and YX Precious 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 British American with a short position of YX Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and YX Precious.
Diversification Opportunities for British American and YX Precious
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between British and 0250 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and YX Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YX Precious Metals and British American 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 British American Tobacco are associated (or correlated) with YX Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YX Precious Metals has no effect on the direction of British American i.e., British American and YX Precious go up and down completely randomly.
Pair Corralation between British American and YX Precious
Assuming the 90 days trading horizon British American Tobacco is expected to under-perform the YX Precious. But the stock apears to be less risky and, when comparing its historical volatility, British American Tobacco is 2.25 times less risky than YX Precious. The stock trades about -0.06 of its potential returns per unit of risk. The YX Precious Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 21.00 in YX Precious Metals on November 19, 2024 and sell it today you would earn a total of 4.00 from holding YX Precious Metals or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
British American Tobacco vs. YX Precious Metals
Performance |
| Timeline |
| British American Tobacco |
| YX Precious Metals |
British American and YX Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and YX Precious
The main advantage of trading using opposite British American and YX Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, YX Precious 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 YX Precious will offset losses from the drop in YX Precious' long position.| British American vs. Apollo Food Holdings | British American vs. Star Media Group | British American vs. SSF Home Group | British American vs. Homeritz Bhd |
| YX Precious vs. PIE Industrial Bhd | YX Precious vs. Sports Toto Berhad | YX Precious vs. Eversafe Rubber Bhd | YX Precious vs. Choo Bee Metal |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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