Correlation Between ECHO INVESTMENT and BP Plc
Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT and BP Plc 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 ECHO INVESTMENT and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECHO INVESTMENT ZY and BP plc, you can compare the effects of market volatilities on ECHO INVESTMENT and BP Plc 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 ECHO INVESTMENT with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and BP Plc.
Diversification Opportunities for ECHO INVESTMENT and BP Plc
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ECHO and BSU is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and ECHO INVESTMENT 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 ECHO INVESTMENT ZY are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and BP Plc go up and down completely randomly.
Pair Corralation between ECHO INVESTMENT and BP Plc
Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to generate 1.79 times more return on investment than BP Plc. However, ECHO INVESTMENT is 1.79 times more volatile than BP plc. It trades about 0.06 of its potential returns per unit of risk. BP plc is currently generating about -0.04 per unit of risk. If you would invest 66.00 in ECHO INVESTMENT ZY on September 4, 2024 and sell it today you would earn a total of 34.00 from holding ECHO INVESTMENT ZY or generate 51.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECHO INVESTMENT ZY vs. BP plc
Performance |
| Timeline |
| ECHO INVESTMENT ZY |
| BP plc |
ECHO INVESTMENT and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECHO INVESTMENT and BP Plc
The main advantage of trading using opposite ECHO INVESTMENT and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| ECHO INVESTMENT vs. GuocoLand Limited | ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. NMI Holdings | ECHO INVESTMENT vs. Origin Agritech |
| BP Plc vs. FANDIFI TECHNOLOGY P | BP Plc vs. Sunny Optical Technology | BP Plc vs. Sanyo Chemical Industries | BP Plc vs. Sekisui Chemical Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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