Correlation Between BEC World and Beauty Community
Can any of the company-specific risk be diversified away by investing in both BEC World and Beauty Community 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 BEC World and Beauty Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEC World Public and Beauty Community Public, you can compare the effects of market volatilities on BEC World and Beauty Community 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 BEC World with a short position of Beauty Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEC World and Beauty Community.
Diversification Opportunities for BEC World and Beauty Community
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BEC and Beauty is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BEC World Public and Beauty Community Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Community Public and BEC World 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 BEC World Public are associated (or correlated) with Beauty Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Community Public has no effect on the direction of BEC World i.e., BEC World and Beauty Community go up and down completely randomly.
Pair Corralation between BEC World and Beauty Community
Assuming the 90 days trading horizon BEC World is expected to generate 1.07 times less return on investment than Beauty Community. But when comparing it to its historical volatility, BEC World Public is 1.0 times less risky than Beauty Community. It trades about 0.05 of its potential returns per unit of risk. Beauty Community Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Beauty Community Public on August 28, 2024 and sell it today you would lose (13.00) from holding Beauty Community Public or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
BEC World Public vs. Beauty Community Public
Performance |
| Timeline |
| BEC World Public |
| Beauty Community Public |
BEC World and Beauty Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BEC World and Beauty Community
The main advantage of trading using opposite BEC World and Beauty Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEC World position performs unexpectedly, Beauty Community 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 Beauty Community will offset losses from the drop in Beauty Community's long position.| BEC World vs. Indara Insurance Public | BEC World vs. Regional Container Lines | BEC World vs. Regional Container Lines | BEC World vs. Mahachai Hospital Public |
| Beauty Community vs. SCB X Public | Beauty Community vs. Kasikornbank Public | Beauty Community vs. PTT Public | Beauty Community vs. Kasikornbank 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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