Correlation Between British American and PIE Industrial
Can any of the company-specific risk be diversified away by investing in both British American and PIE Industrial 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 PIE Industrial 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 PIE Industrial Bhd, you can compare the effects of market volatilities on British American and PIE Industrial 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 PIE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and PIE Industrial.
Diversification Opportunities for British American and PIE Industrial
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between British and PIE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial 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 PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of British American i.e., British American and PIE Industrial go up and down completely randomly.
Pair Corralation between British American and PIE Industrial
Assuming the 90 days trading horizon British American is expected to generate 15.66 times less return on investment than PIE Industrial. But when comparing it to its historical volatility, British American Tobacco is 1.1 times less risky than PIE Industrial. It trades about 0.0 of its potential returns per unit of risk. PIE Industrial Bhd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 545.00 in PIE Industrial Bhd on August 31, 2024 and sell it today you would earn a total of 35.00 from holding PIE Industrial Bhd or generate 6.42% 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. PIE Industrial Bhd
Performance |
| Timeline |
| British American Tobacco |
| PIE Industrial Bhd |
British American and PIE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and PIE Industrial
The main advantage of trading using opposite British American and PIE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, PIE Industrial 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 PIE Industrial will offset losses from the drop in PIE Industrial'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 |
| PIE Industrial vs. Nova Wellness Group | PIE Industrial vs. Uchi Technologies Bhd | PIE Industrial vs. Sunway Construction Group | PIE Industrial vs. Tex Cycle Technology |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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