Correlation Between Absolute Clean and BCPG Public
Can any of the company-specific risk be diversified away by investing in both Absolute Clean and BCPG Public 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 Absolute Clean and BCPG Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Clean Energy and BCPG Public, you can compare the effects of market volatilities on Absolute Clean and BCPG Public 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 Absolute Clean with a short position of BCPG Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Clean and BCPG Public.
Diversification Opportunities for Absolute Clean and BCPG Public
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Absolute and BCPG is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Clean Energy and BCPG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCPG Public and Absolute Clean 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 Absolute Clean Energy are associated (or correlated) with BCPG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCPG Public has no effect on the direction of Absolute Clean i.e., Absolute Clean and BCPG Public go up and down completely randomly.
Pair Corralation between Absolute Clean and BCPG Public
Assuming the 90 days trading horizon Absolute Clean Energy is expected to generate 0.48 times more return on investment than BCPG Public. However, Absolute Clean Energy is 2.1 times less risky than BCPG Public. It trades about -0.18 of its potential returns per unit of risk. BCPG Public is currently generating about -0.25 per unit of risk. If you would invest 141.00 in Absolute Clean Energy on August 30, 2024 and sell it today you would lose (11.00) from holding Absolute Clean Energy or give up 7.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Absolute Clean Energy vs. BCPG Public
Performance |
| Timeline |
| Absolute Clean Energy |
| BCPG Public |
Absolute Clean and BCPG Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Clean and BCPG Public
The main advantage of trading using opposite Absolute Clean and BCPG Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Clean position performs unexpectedly, BCPG Public 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 BCPG Public will offset losses from the drop in BCPG Public's long position.| Absolute Clean vs. BCPG Public | Absolute Clean vs. Energy Absolute Public | Absolute Clean vs. Gunkul Engineering Public | Absolute Clean vs. Gulf Energy Development |
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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 Stocks Directory module to find actively traded stocks across global markets.
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