Correlation Between Beco Steel and Oil
Can any of the company-specific risk be diversified away by investing in both Beco Steel and Oil 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 Beco Steel and Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beco Steel and Oil and Gas, you can compare the effects of market volatilities on Beco Steel and Oil 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 Beco Steel with a short position of Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beco Steel and Oil.
Diversification Opportunities for Beco Steel and Oil
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beco and Oil is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Beco Steel and Oil and Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil and Gas and Beco Steel 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 Beco Steel are associated (or correlated) with Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil and Gas has no effect on the direction of Beco Steel i.e., Beco Steel and Oil go up and down completely randomly.
Pair Corralation between Beco Steel and Oil
Assuming the 90 days trading horizon Beco Steel is expected to under-perform the Oil. In addition to that, Beco Steel is 1.71 times more volatile than Oil and Gas. It trades about 0.0 of its total potential returns per unit of risk. Oil and Gas is currently generating about 0.18 per unit of volatility. If you would invest 12,737 in Oil and Gas on August 26, 2024 and sell it today you would earn a total of 6,732 from holding Oil and Gas or generate 52.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.36% |
| Values | Daily Returns |
Beco Steel vs. Oil and Gas
Performance |
| Timeline |
| Beco Steel |
| Oil and Gas |
Beco Steel and Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beco Steel and Oil
The main advantage of trading using opposite Beco Steel and Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beco Steel position performs unexpectedly, Oil 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 Oil will offset losses from the drop in Oil's long position.| Beco Steel vs. National Bank of | Beco Steel vs. Faysal Bank | Beco Steel vs. Escorts Investment Bank | Beco Steel vs. Allied Bank |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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