Correlation Between British American and Lupatech
Can any of the company-specific risk be diversified away by investing in both British American and Lupatech 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 British American and Lupatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Lupatech SA, you can compare the effects of market volatilities on British American and Lupatech 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 British American with a short position of Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Lupatech.
Diversification Opportunities for British American and Lupatech
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between British and Lupatech is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA and British American 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 British American Tobacco are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of British American i.e., British American and Lupatech go up and down completely randomly.
Pair Corralation between British American and Lupatech
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.44 times more return on investment than Lupatech. However, British American Tobacco is 2.29 times less risky than Lupatech. It trades about 0.04 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.04 per unit of risk. If you would invest 3,655 in British American Tobacco on September 3, 2024 and sell it today you would earn a total of 912.00 from holding British American Tobacco or generate 24.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
British American Tobacco vs. Lupatech SA
Performance |
| Timeline |
| British American Tobacco |
| Lupatech SA |
British American and Lupatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Lupatech
The main advantage of trading using opposite British American and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Lupatech 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 Lupatech will offset losses from the drop in Lupatech's long position.| British American vs. Fundo Investimento Imobiliario | British American vs. Fras le SA | British American vs. Western Digital | British American vs. Clave Indices De |
| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Eternit SA |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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