Correlation Between BP Plastics and YX Precious
Can any of the company-specific risk be diversified away by investing in both BP Plastics and YX Precious 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 YX Precious 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 YX Precious Metals, you can compare the effects of market volatilities on BP Plastics and YX Precious 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 YX Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plastics and YX Precious.
Diversification Opportunities for BP Plastics and YX Precious
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 5100 and 0250 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BP Plastics Holding and YX Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YX Precious Metals 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 YX Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YX Precious Metals has no effect on the direction of BP Plastics i.e., BP Plastics and YX Precious go up and down completely randomly.
Pair Corralation between BP Plastics and YX Precious
Assuming the 90 days trading horizon BP Plastics Holding is expected to generate 0.84 times more return on investment than YX Precious. However, BP Plastics Holding is 1.19 times less risky than YX Precious. It trades about 0.03 of its potential returns per unit of risk. YX Precious Metals is currently generating about -0.29 per unit of risk. If you would invest 121.00 in BP Plastics Holding on August 31, 2024 and sell it today you would earn a total of 1.00 from holding BP Plastics Holding or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BP Plastics Holding vs. YX Precious Metals
Performance |
| Timeline |
| BP Plastics Holding |
| YX Precious Metals |
BP Plastics and YX Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Plastics and YX Precious
The main advantage of trading using opposite BP Plastics and YX Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plastics position performs unexpectedly, YX Precious 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 YX Precious will offset losses from the drop in YX Precious' long position.| BP Plastics vs. Binasat Communications Bhd | BP Plastics vs. Daya Materials Bhd | BP Plastics vs. Public Packages Holdings | BP Plastics vs. Farm Price Holdings |
| YX Precious vs. Malayan Banking Bhd | YX Precious vs. Public Bank Bhd | YX Precious vs. Petronas Chemicals Group | YX Precious 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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