Correlation Between Leader Steel and BP Plastics
Can any of the company-specific risk be diversified away by investing in both Leader Steel 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 Leader Steel and BP Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Steel Holdings and BP Plastics Holding, you can compare the effects of market volatilities on Leader Steel 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 Leader Steel with a short position of BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Steel and BP Plastics.
Diversification Opportunities for Leader Steel and BP Plastics
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leader and 5100 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Leader Steel Holdings 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 Leader Steel 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 Leader Steel Holdings 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 Leader Steel i.e., Leader Steel and BP Plastics go up and down completely randomly.
Pair Corralation between Leader Steel and BP Plastics
Assuming the 90 days trading horizon Leader Steel Holdings is expected to under-perform the BP Plastics. In addition to that, Leader Steel is 1.4 times more volatile than BP Plastics Holding. It trades about -0.13 of its total potential returns per unit of risk. BP Plastics Holding is currently generating about 0.0 per unit of volatility. If you would invest 120.00 in BP Plastics Holding on October 26, 2024 and sell it today you would lose (1.00) from holding BP Plastics Holding or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Leader Steel Holdings vs. BP Plastics Holding
Performance |
| Timeline |
| Leader Steel Holdings |
| BP Plastics Holding |
Leader Steel and BP Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Steel and BP Plastics
The main advantage of trading using opposite Leader Steel and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Steel 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.| Leader Steel vs. ES Ceramics Technology | Leader Steel vs. CPE Technology Berhad | Leader Steel vs. Cloudpoint Technology Berhad | Leader Steel vs. Sports Toto Berhad |
| BP Plastics vs. Kossan Rubber Industries | BP Plastics vs. Sports Toto Berhad | BP Plastics vs. Leader Steel Holdings | BP Plastics vs. Choo Bee Metal |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |