Correlation Between BSP Financial and Andean Silver
Can any of the company-specific risk be diversified away by investing in both BSP Financial and Andean Silver 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 BSP Financial and Andean Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BSP Financial Group and Andean Silver Limited, you can compare the effects of market volatilities on BSP Financial and Andean Silver 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 BSP Financial with a short position of Andean Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and Andean Silver.
Diversification Opportunities for BSP Financial and Andean Silver
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BSP and Andean is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Andean Silver Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andean Silver Limited and BSP Financial 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 BSP Financial Group are associated (or correlated) with Andean Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andean Silver Limited has no effect on the direction of BSP Financial i.e., BSP Financial and Andean Silver go up and down completely randomly.
Pair Corralation between BSP Financial and Andean Silver
Assuming the 90 days trading horizon BSP Financial Group is expected to generate 0.46 times more return on investment than Andean Silver. However, BSP Financial Group is 2.2 times less risky than Andean Silver. It trades about 0.09 of its potential returns per unit of risk. Andean Silver Limited is currently generating about -0.36 per unit of risk. If you would invest 630.00 in BSP Financial Group on August 29, 2024 and sell it today you would earn a total of 20.00 from holding BSP Financial Group or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BSP Financial Group vs. Andean Silver Limited
Performance |
| Timeline |
| BSP Financial Group |
| Andean Silver Limited |
BSP Financial and Andean Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSP Financial and Andean Silver
The main advantage of trading using opposite BSP Financial and Andean Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSP Financial position performs unexpectedly, Andean Silver 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 Andean Silver will offset losses from the drop in Andean Silver's long position.| BSP Financial vs. Energy Resources | BSP Financial vs. 88 Energy | BSP Financial vs. Amani Gold | BSP Financial vs. A1 Investments Resources |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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