Correlation Between BRITISH AMERICAN and LONGHORN PUBLISHERS
Can any of the company-specific risk be diversified away by investing in both BRITISH AMERICAN and LONGHORN PUBLISHERS 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 LONGHORN PUBLISHERS 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 LONGHORN PUBLISHERS LTD, you can compare the effects of market volatilities on BRITISH AMERICAN and LONGHORN PUBLISHERS 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 LONGHORN PUBLISHERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRITISH AMERICAN and LONGHORN PUBLISHERS.
Diversification Opportunities for BRITISH AMERICAN and LONGHORN PUBLISHERS
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between BRITISH and LONGHORN is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding BRITISH AMERICAN TOBACCO and LONGHORN PUBLISHERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LONGHORN PUBLISHERS LTD 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 LONGHORN PUBLISHERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LONGHORN PUBLISHERS LTD has no effect on the direction of BRITISH AMERICAN i.e., BRITISH AMERICAN and LONGHORN PUBLISHERS go up and down completely randomly.
Pair Corralation between BRITISH AMERICAN and LONGHORN PUBLISHERS
Assuming the 90 days trading horizon BRITISH AMERICAN TOBACCO is expected to generate 0.12 times more return on investment than LONGHORN PUBLISHERS. However, BRITISH AMERICAN TOBACCO is 8.69 times less risky than LONGHORN PUBLISHERS. It trades about 0.0 of its potential returns per unit of risk. LONGHORN PUBLISHERS LTD is currently generating about -0.01 per unit of risk. If you would invest 35,000 in BRITISH AMERICAN TOBACCO on September 5, 2024 and sell it today you would lose (25.00) from holding BRITISH AMERICAN TOBACCO or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRITISH AMERICAN TOBACCO vs. LONGHORN PUBLISHERS LTD
Performance |
| Timeline |
| BRITISH AMERICAN TOBACCO |
| LONGHORN PUBLISHERS LTD |
BRITISH AMERICAN and LONGHORN PUBLISHERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRITISH AMERICAN and LONGHORN PUBLISHERS
The main advantage of trading using opposite BRITISH AMERICAN and LONGHORN PUBLISHERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRITISH AMERICAN position performs unexpectedly, LONGHORN PUBLISHERS 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 LONGHORN PUBLISHERS will offset losses from the drop in LONGHORN PUBLISHERS's long position.| BRITISH AMERICAN vs. EQUITY GROUP HOLDINGS | BRITISH AMERICAN vs. CO OPERATIVE BANK OF | BRITISH AMERICAN vs. ABSA NEW GOLD | BRITISH AMERICAN vs. KENYA ORCHARDS LTD |
| LONGHORN PUBLISHERS vs. EQUITY GROUP HOLDINGS | LONGHORN PUBLISHERS vs. BRITISH AMERICAN TOBACCO | LONGHORN PUBLISHERS vs. CO OPERATIVE BANK OF | LONGHORN PUBLISHERS vs. ABSA NEW GOLD |
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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