Correlation Between British American and Public Packages
Can any of the company-specific risk be diversified away by investing in both British American and Public Packages 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 Public Packages 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 Public Packages Holdings, you can compare the effects of market volatilities on British American and Public Packages 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 Public Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Public Packages.
Diversification Opportunities for British American and Public Packages
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between British and Public is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Public Packages Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Packages Holdings 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 Public Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Packages Holdings has no effect on the direction of British American i.e., British American and Public Packages go up and down completely randomly.
Pair Corralation between British American and Public Packages
Assuming the 90 days trading horizon British American Tobacco is expected to generate 1.26 times more return on investment than Public Packages. However, British American is 1.26 times more volatile than Public Packages Holdings. It trades about 0.01 of its potential returns per unit of risk. Public Packages Holdings is currently generating about -0.1 per unit of risk. If you would invest 772.00 in British American Tobacco on September 3, 2024 and sell it today you would lose (3.00) from holding British American Tobacco or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Public Packages Holdings
Performance |
| Timeline |
| British American Tobacco |
| Public Packages Holdings |
British American and Public Packages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Public Packages
The main advantage of trading using opposite British American and Public Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Public Packages 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 Public Packages will offset losses from the drop in Public Packages' long position.| British American vs. Hong Leong Bank | British American vs. Alliance Financial Group | British American vs. Senheng New Retail | British American vs. Cosmos Technology International |
| Public Packages vs. Malayan Banking Bhd | Public Packages vs. Public Bank Bhd | Public Packages vs. Petronas Chemicals Group | Public Packages vs. Tenaga Nasional Bhd |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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