Correlation Between Beauty Community and Better World
Can any of the company-specific risk be diversified away by investing in both Beauty Community and Better World 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 Beauty Community and Better World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beauty Community Public and Better World Green, you can compare the effects of market volatilities on Beauty Community and Better World 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 Beauty Community with a short position of Better World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beauty Community and Better World.
Diversification Opportunities for Beauty Community and Better World
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beauty and Better is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Community Public and Better World Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better World Green and Beauty Community 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 Beauty Community Public are associated (or correlated) with Better World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better World Green has no effect on the direction of Beauty Community i.e., Beauty Community and Better World go up and down completely randomly.
Pair Corralation between Beauty Community and Better World
Assuming the 90 days trading horizon Beauty Community Public is expected to generate 13.22 times more return on investment than Better World. However, Beauty Community is 13.22 times more volatile than Better World Green. It trades about 0.04 of its potential returns per unit of risk. Better World Green is currently generating about -0.02 per unit of risk. If you would invest 125.00 in Beauty Community Public on August 30, 2024 and sell it today you would lose (88.00) from holding Beauty Community Public or give up 70.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beauty Community Public vs. Better World Green
Performance |
| Timeline |
| Beauty Community Public |
| Better World Green |
Beauty Community and Better World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beauty Community and Better World
The main advantage of trading using opposite Beauty Community and Better World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beauty Community position performs unexpectedly, Better World 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 Better World will offset losses from the drop in Better World's long position.| Beauty Community vs. CP ALL Public | Beauty Community vs. Bangkok Dusit Medical | Beauty Community vs. Central Pattana Public | Beauty Community vs. Advanced Info Service |
| Better World vs. Beauty Community Public | Better World vs. Demco Public | Better World vs. Asia Aviation Public | Better World vs. CK Power Public |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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