Correlation Between PIE Industrial and BP Plastics
Can any of the company-specific risk be diversified away by investing in both PIE Industrial 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 PIE Industrial and BP Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIE Industrial Bhd and BP Plastics Holding, you can compare the effects of market volatilities on PIE Industrial 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 PIE Industrial with a short position of BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIE Industrial and BP Plastics.
Diversification Opportunities for PIE Industrial and BP Plastics
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PIE and 5100 is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd 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 PIE Industrial 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 PIE Industrial Bhd 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 PIE Industrial i.e., PIE Industrial and BP Plastics go up and down completely randomly.
Pair Corralation between PIE Industrial and BP Plastics
Assuming the 90 days trading horizon PIE Industrial Bhd is expected to generate 1.43 times more return on investment than BP Plastics. However, PIE Industrial is 1.43 times more volatile than BP Plastics Holding. It trades about 0.18 of its potential returns per unit of risk. BP Plastics Holding is currently generating about -0.03 per unit of risk. If you would invest 511.00 in PIE Industrial Bhd on September 12, 2024 and sell it today you would earn a total of 114.00 from holding PIE Industrial Bhd or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
PIE Industrial Bhd vs. BP Plastics Holding
Performance |
| Timeline |
| PIE Industrial Bhd |
| BP Plastics Holding |
PIE Industrial and BP Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIE Industrial and BP Plastics
The main advantage of trading using opposite PIE Industrial and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIE Industrial 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.| PIE Industrial vs. BP Plastics Holding | PIE Industrial vs. Media Prima Bhd | PIE Industrial vs. Binasat Communications Bhd | PIE Industrial vs. Computer Forms Bhd |
| BP Plastics vs. Dnonce Tech Bhd | BP Plastics vs. Advanced Packaging Tech | BP Plastics vs. Al Aqar Healthcare | BP Plastics vs. PMB Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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