Correlation Between BSP Financial and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both BSP Financial and Hammer Metals 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 Hammer Metals 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 Hammer Metals, you can compare the effects of market volatilities on BSP Financial and Hammer Metals 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 Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and Hammer Metals.
Diversification Opportunities for BSP Financial and Hammer Metals
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BSP and Hammer is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals 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 Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of BSP Financial i.e., BSP Financial and Hammer Metals go up and down completely randomly.
Pair Corralation between BSP Financial and Hammer Metals
Assuming the 90 days trading horizon BSP Financial Group is expected to generate 0.36 times more return on investment than Hammer Metals. However, BSP Financial Group is 2.79 times less risky than Hammer Metals. It trades about 0.08 of its potential returns per unit of risk. Hammer Metals is currently generating about -0.01 per unit of risk. If you would invest 398.00 in BSP Financial Group on October 30, 2024 and sell it today you would earn a total of 334.00 from holding BSP Financial Group or generate 83.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BSP Financial Group vs. Hammer Metals
Performance |
| Timeline |
| BSP Financial Group |
| Hammer Metals |
BSP Financial and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSP Financial and Hammer Metals
The main advantage of trading using opposite BSP Financial and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSP Financial position performs unexpectedly, Hammer Metals 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| BSP Financial vs. Argo Investments | BSP Financial vs. MFF Capital Investments | BSP Financial vs. Lendlease Group | BSP Financial vs. Flagship Investments |
| Hammer Metals vs. Macquarie Technology Group | Hammer Metals vs. Dalaroo Metals | Hammer Metals vs. Super Retail Group | Hammer Metals vs. Computershare |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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