Correlation Between British American and Homeritz Bhd
Can any of the company-specific risk be diversified away by investing in both British American and Homeritz Bhd 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 Homeritz Bhd 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 Homeritz Bhd, you can compare the effects of market volatilities on British American and Homeritz Bhd 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 Homeritz Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Homeritz Bhd.
Diversification Opportunities for British American and Homeritz Bhd
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between British and Homeritz is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Homeritz Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeritz Bhd 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 Homeritz Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeritz Bhd has no effect on the direction of British American i.e., British American and Homeritz Bhd go up and down completely randomly.
Pair Corralation between British American and Homeritz Bhd
Assuming the 90 days trading horizon British American Tobacco is expected to generate 2.08 times more return on investment than Homeritz Bhd. However, British American is 2.08 times more volatile than Homeritz Bhd. It trades about 0.15 of its potential returns per unit of risk. Homeritz Bhd is currently generating about 0.13 per unit of risk. If you would invest 699.00 in British American Tobacco on August 30, 2024 and sell it today you would earn a total of 58.00 from holding British American Tobacco or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Homeritz Bhd
Performance |
| Timeline |
| British American Tobacco |
| Homeritz Bhd |
British American and Homeritz Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Homeritz Bhd
The main advantage of trading using opposite British American and Homeritz Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Homeritz Bhd 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 Homeritz Bhd will offset losses from the drop in Homeritz Bhd's long position.| British American vs. Alliance Financial Group | British American vs. MClean Technologies Bhd | British American vs. MyTech Group Bhd | British American vs. Supercomnet Technologies Bhd |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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