Correlation Between Autosports and Bisalloy Steel
Can any of the company-specific risk be diversified away by investing in both Autosports and Bisalloy Steel 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 Autosports and Bisalloy Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and Bisalloy Steel Group, you can compare the effects of market volatilities on Autosports and Bisalloy Steel 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 Autosports with a short position of Bisalloy Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and Bisalloy Steel.
Diversification Opportunities for Autosports and Bisalloy Steel
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Autosports and Bisalloy is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and Bisalloy Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisalloy Steel Group and Autosports 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 Autosports Group are associated (or correlated) with Bisalloy Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisalloy Steel Group has no effect on the direction of Autosports i.e., Autosports and Bisalloy Steel go up and down completely randomly.
Pair Corralation between Autosports and Bisalloy Steel
Assuming the 90 days trading horizon Autosports Group is expected to under-perform the Bisalloy Steel. But the stock apears to be less risky and, when comparing its historical volatility, Autosports Group is 4.01 times less risky than Bisalloy Steel. The stock trades about -0.5 of its potential returns per unit of risk. The Bisalloy Steel Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 306.00 in Bisalloy Steel Group on September 4, 2024 and sell it today you would earn a total of 75.00 from holding Bisalloy Steel Group or generate 24.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autosports Group vs. Bisalloy Steel Group
Performance |
| Timeline |
| Autosports Group |
| Bisalloy Steel Group |
Autosports and Bisalloy Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autosports and Bisalloy Steel
The main advantage of trading using opposite Autosports and Bisalloy Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, Bisalloy Steel 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 Bisalloy Steel will offset losses from the drop in Bisalloy Steel's long position.| Autosports vs. Aneka Tambang Tbk | Autosports vs. BHP Group Limited | Autosports vs. Commonwealth Bank | Autosports vs. Commonwealth Bank of |
| Bisalloy Steel vs. Northern Star Resources | Bisalloy Steel vs. Evolution Mining | Bisalloy Steel vs. Sandfire Resources NL | Bisalloy Steel vs. Aneka Tambang Tbk |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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