Correlation Between BSP Financial and Credit Clear
Can any of the company-specific risk be diversified away by investing in both BSP Financial and Credit Clear 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 Credit Clear 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 Credit Clear, you can compare the effects of market volatilities on BSP Financial and Credit Clear 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 Credit Clear. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and Credit Clear.
Diversification Opportunities for BSP Financial and Credit Clear
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BSP and Credit is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Credit Clear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Clear 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 Credit Clear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Clear has no effect on the direction of BSP Financial i.e., BSP Financial and Credit Clear go up and down completely randomly.
Pair Corralation between BSP Financial and Credit Clear
Assuming the 90 days trading horizon BSP Financial Group is expected to generate 0.44 times more return on investment than Credit Clear. However, BSP Financial Group is 2.27 times less risky than Credit Clear. It trades about 0.07 of its potential returns per unit of risk. Credit Clear is currently generating about 0.02 per unit of risk. If you would invest 397.00 in BSP Financial Group on August 29, 2024 and sell it today you would earn a total of 265.00 from holding BSP Financial Group or generate 66.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BSP Financial Group vs. Credit Clear
Performance |
| Timeline |
| BSP Financial Group |
| Credit Clear |
BSP Financial and Credit Clear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSP Financial and Credit Clear
The main advantage of trading using opposite BSP Financial and Credit Clear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSP Financial position performs unexpectedly, Credit Clear 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 Credit Clear will offset losses from the drop in Credit Clear's long position.| BSP Financial vs. Champion Iron | BSP Financial vs. Ridley | BSP Financial vs. Peel Mining | BSP Financial vs. Australian Dairy Farms |
| Credit Clear vs. PVW Resources | Credit Clear vs. Woolworths | Credit Clear vs. Wesfarmers | Credit Clear vs. Coles Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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