Correlation Between BCE and Solitron Devices
Can any of the company-specific risk be diversified away by investing in both BCE and Solitron Devices 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 BCE and Solitron Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Solitron Devices, you can compare the effects of market volatilities on BCE and Solitron Devices 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 BCE with a short position of Solitron Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Solitron Devices.
Diversification Opportunities for BCE and Solitron Devices
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BCE and Solitron is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Solitron Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solitron Devices and BCE 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 BCE Inc are associated (or correlated) with Solitron Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solitron Devices has no effect on the direction of BCE i.e., BCE and Solitron Devices go up and down completely randomly.
Pair Corralation between BCE and Solitron Devices
Assuming the 90 days horizon BCE is expected to generate 7.1 times less return on investment than Solitron Devices. But when comparing it to its historical volatility, BCE Inc is 4.84 times less risky than Solitron Devices. It trades about 0.03 of its potential returns per unit of risk. Solitron Devices is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,010 in Solitron Devices on December 1, 2024 and sell it today you would earn a total of 581.00 from holding Solitron Devices or generate 57.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. Solitron Devices
Performance |
| Timeline |
| BCE Inc |
| Solitron Devices |
BCE and Solitron Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Solitron Devices
The main advantage of trading using opposite BCE and Solitron Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Solitron Devices 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 Solitron Devices will offset losses from the drop in Solitron Devices' long position.| BCE vs. 51Talk Online Education | BCE vs. United Airlines Holdings | BCE vs. Mesa Air Group | BCE vs. Torm PLC Class |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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