Correlation Between BP Plastics and Eversafe Rubber

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both BP Plastics and Eversafe Rubber 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 BP Plastics and Eversafe Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP Plastics Holding and Eversafe Rubber Bhd, you can compare the effects of market volatilities on BP Plastics and Eversafe Rubber 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 BP Plastics with a short position of Eversafe Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plastics and Eversafe Rubber.

Diversification Opportunities for BP Plastics and Eversafe Rubber

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between 5100 and Eversafe is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BP Plastics Holding and Eversafe Rubber Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversafe Rubber Bhd and BP Plastics 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 BP Plastics Holding are associated (or correlated) with Eversafe Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversafe Rubber Bhd has no effect on the direction of BP Plastics i.e., BP Plastics and Eversafe Rubber go up and down completely randomly.

Pair Corralation between BP Plastics and Eversafe Rubber

Assuming the 90 days trading horizon BP Plastics is expected to generate 1.04 times less return on investment than Eversafe Rubber. But when comparing it to its historical volatility, BP Plastics Holding is 2.08 times less risky than Eversafe Rubber. It trades about 0.02 of its potential returns per unit of risk. Eversafe Rubber Bhd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Eversafe Rubber Bhd on September 3, 2024 and sell it today you would lose (4.00) from holding Eversafe Rubber Bhd or give up 20.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.17%
ValuesDaily Returns

BP Plastics Holding  vs.  Eversafe Rubber Bhd

 Performance 
       Timeline  
BP Plastics Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BP Plastics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, BP Plastics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Eversafe Rubber Bhd 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eversafe Rubber Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BP Plastics and Eversafe Rubber Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BP Plastics and Eversafe Rubber

The main advantage of trading using opposite BP Plastics and Eversafe Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plastics position performs unexpectedly, Eversafe Rubber 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 Eversafe Rubber will offset losses from the drop in Eversafe Rubber's long position.
The idea behind BP Plastics Holding and Eversafe Rubber Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

Other Complementary Tools

Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Stocks Directory
Find actively traded stocks across global markets
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios