Correlation Between British American and Press Metal
Can any of the company-specific risk be diversified away by investing in both British American and Press Metal 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 Press Metal 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 Press Metal Bhd, you can compare the effects of market volatilities on British American and Press Metal 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 Press Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Press Metal.
Diversification Opportunities for British American and Press Metal
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between British and Press is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal 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 Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of British American i.e., British American and Press Metal go up and down completely randomly.
Pair Corralation between British American and Press Metal
Assuming the 90 days trading horizon British American Tobacco is expected to generate 1.13 times more return on investment than Press Metal. However, British American is 1.13 times more volatile than Press Metal Bhd. It trades about 0.15 of its potential returns per unit of risk. Press Metal Bhd is currently generating about 0.0 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 | 95.45% |
| Values | Daily Returns |
British American Tobacco vs. Press Metal Bhd
Performance |
| Timeline |
| British American Tobacco |
| Press Metal Bhd |
British American and Press Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Press Metal
The main advantage of trading using opposite British American and Press Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Press Metal 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 Press Metal will offset losses from the drop in Press Metal'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 |
| Press Metal vs. Diversified Gateway Solutions | Press Metal vs. YX Precious Metals | Press Metal vs. K One Technology Bhd | Press Metal vs. Computer Forms 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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