Correlation Between Al Aqar and BP Plastics
Can any of the company-specific risk be diversified away by investing in both Al Aqar and BP Plastics 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 Al Aqar and BP Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Al Aqar Healthcare and BP Plastics Holding, you can compare the effects of market volatilities on Al Aqar and BP Plastics 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 Al Aqar with a short position of BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Aqar and BP Plastics.
Diversification Opportunities for Al Aqar and BP Plastics
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 5116 and 5100 is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Al Aqar Healthcare and BP Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Plastics Holding and Al Aqar 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 Al Aqar Healthcare are associated (or correlated) with BP Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Plastics Holding has no effect on the direction of Al Aqar i.e., Al Aqar and BP Plastics go up and down completely randomly.
Pair Corralation between Al Aqar and BP Plastics
Assuming the 90 days trading horizon Al Aqar Healthcare is expected to generate 1.03 times more return on investment than BP Plastics. However, Al Aqar is 1.03 times more volatile than BP Plastics Holding. It trades about -0.02 of its potential returns per unit of risk. BP Plastics Holding is currently generating about -0.1 per unit of risk. If you would invest 139.00 in Al Aqar Healthcare on September 13, 2024 and sell it today you would lose (1.00) from holding Al Aqar Healthcare or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Al Aqar Healthcare vs. BP Plastics Holding
Performance |
| Timeline |
| Al Aqar Healthcare |
| BP Plastics Holding |
Al Aqar and BP Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Aqar and BP Plastics
The main advantage of trading using opposite Al Aqar and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Aqar position performs unexpectedly, BP Plastics 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 Plastics will offset losses from the drop in BP Plastics' long position.| Al Aqar vs. Eonmetall Group Bhd | Al Aqar vs. YX Precious Metals | Al Aqar vs. Public Bank Bhd | Al Aqar vs. IHH Healthcare Bhd |
| BP Plastics vs. Petronas Chemicals Group | BP Plastics vs. Eversafe Rubber Bhd | BP Plastics vs. Sapura Industrial Bhd | BP Plastics vs. Melewar Industrial Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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