Correlation Between Homeritz Bhd and British American
Can any of the company-specific risk be diversified away by investing in both Homeritz Bhd and British American 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 Homeritz Bhd and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homeritz Bhd and British American Tobacco, you can compare the effects of market volatilities on Homeritz Bhd and British American 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 Homeritz Bhd with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homeritz Bhd and British American.
Diversification Opportunities for Homeritz Bhd and British American
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Homeritz and British is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Homeritz Bhd and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Homeritz Bhd 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 Homeritz Bhd are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Homeritz Bhd i.e., Homeritz Bhd and British American go up and down completely randomly.
Pair Corralation between Homeritz Bhd and British American
Assuming the 90 days trading horizon Homeritz Bhd is expected to generate 2.36 times less return on investment than British American. But when comparing it to its historical volatility, Homeritz Bhd is 2.08 times less risky than British American. It trades about 0.13 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 699.00 in British American Tobacco on August 30, 2024 and sell it today you would earn a total of 58.00 from holding British American Tobacco or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homeritz Bhd vs. British American Tobacco
Performance |
| Timeline |
| Homeritz Bhd |
| British American Tobacco |
Homeritz Bhd and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homeritz Bhd and British American
The main advantage of trading using opposite Homeritz Bhd and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homeritz Bhd position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Homeritz Bhd vs. Malayan Banking Bhd | Homeritz Bhd vs. Public Bank Bhd | Homeritz Bhd vs. Petronas Chemicals Group | Homeritz Bhd vs. IHH Healthcare Bhd |
| British American vs. Alliance Financial Group | British American vs. MClean Technologies Bhd | British American vs. MyTech Group Bhd | British American vs. Supercomnet Technologies 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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