Correlation Between British American and Riverview Rubber
Can any of the company-specific risk be diversified away by investing in both British American and Riverview Rubber 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 Riverview Rubber 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 Riverview Rubber Estates, you can compare the effects of market volatilities on British American and Riverview Rubber 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 Riverview Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Riverview Rubber.
Diversification Opportunities for British American and Riverview Rubber
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between British and Riverview is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Riverview Rubber Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverview Rubber Estates 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 Riverview Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverview Rubber Estates has no effect on the direction of British American i.e., British American and Riverview Rubber go up and down completely randomly.
Pair Corralation between British American and Riverview Rubber
Assuming the 90 days trading horizon British American is expected to generate 1.08 times less return on investment than Riverview Rubber. In addition to that, British American is 1.11 times more volatile than Riverview Rubber Estates. It trades about 0.03 of its total potential returns per unit of risk. Riverview Rubber Estates is currently generating about 0.03 per unit of volatility. If you would invest 298.00 in Riverview Rubber Estates on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Riverview Rubber Estates or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
British American Tobacco vs. Riverview Rubber Estates
Performance |
| Timeline |
| British American Tobacco |
| Riverview Rubber Estates |
British American and Riverview Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Riverview Rubber
The main advantage of trading using opposite British American and Riverview Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Riverview Rubber 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 Riverview Rubber will offset losses from the drop in Riverview Rubber's long position.| British American vs. DC HEALTHCARE HOLDINGS | British American vs. PMB Technology Bhd | British American vs. Magni Tech Industries | British American vs. Senheng New Retail |
| Riverview Rubber vs. Datasonic Group Bhd | Riverview Rubber vs. Malaysia Steel Works | Riverview Rubber vs. Sungei Bagan Rubber | Riverview Rubber vs. Aeon Credit Service |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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