Correlation Between BP Plastics and CSC Steel
Can any of the company-specific risk be diversified away by investing in both BP Plastics and CSC Steel 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 CSC Steel 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 CSC Steel Holdings, you can compare the effects of market volatilities on BP Plastics and CSC Steel 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 CSC Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plastics and CSC Steel.
Diversification Opportunities for BP Plastics and CSC Steel
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 5100 and CSC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BP Plastics Holding and CSC Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSC Steel Holdings 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 CSC Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSC Steel Holdings has no effect on the direction of BP Plastics i.e., BP Plastics and CSC Steel go up and down completely randomly.
Pair Corralation between BP Plastics and CSC Steel
Assuming the 90 days trading horizon BP Plastics Holding is expected to generate 2.63 times more return on investment than CSC Steel. However, BP Plastics is 2.63 times more volatile than CSC Steel Holdings. It trades about 0.01 of its potential returns per unit of risk. CSC Steel Holdings is currently generating about -0.04 per unit of risk. If you would invest 120.00 in BP Plastics Holding on October 11, 2024 and sell it today you would earn a total of 0.00 from holding BP Plastics Holding or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
BP Plastics Holding vs. CSC Steel Holdings
Performance |
| Timeline |
| BP Plastics Holding |
| CSC Steel Holdings |
BP Plastics and CSC Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Plastics and CSC Steel
The main advantage of trading using opposite BP Plastics and CSC Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plastics position performs unexpectedly, CSC Steel 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 CSC Steel will offset losses from the drop in CSC Steel's long position.| BP Plastics vs. Central Industrial Corp | BP Plastics vs. Cengild Medical Berhad | BP Plastics vs. Melewar Industrial Group | BP Plastics vs. Al Aqar Healthcare |
| CSC Steel vs. Eversafe Rubber Bhd | CSC Steel vs. BP Plastics Holding | CSC Steel vs. Public Packages Holdings | CSC Steel vs. YX Precious Metals |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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