Correlation Between BSP Financial and Latitude Financial
Can any of the company-specific risk be diversified away by investing in both BSP Financial and Latitude Financial 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 Latitude Financial 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 Latitude Financial Services, you can compare the effects of market volatilities on BSP Financial and Latitude Financial 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 Latitude Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and Latitude Financial.
Diversification Opportunities for BSP Financial and Latitude Financial
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BSP and Latitude is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Latitude Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latitude Financial 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 Latitude Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latitude Financial has no effect on the direction of BSP Financial i.e., BSP Financial and Latitude Financial go up and down completely randomly.
Pair Corralation between BSP Financial and Latitude Financial
Assuming the 90 days trading horizon BSP Financial Group is expected to generate 2.41 times more return on investment than Latitude Financial. However, BSP Financial is 2.41 times more volatile than Latitude Financial Services. It trades about 0.07 of its potential returns per unit of risk. Latitude Financial Services is currently generating about -0.01 per unit of risk. If you would invest 440.00 in BSP Financial Group on September 12, 2024 and sell it today you would earn a total of 205.00 from holding BSP Financial Group or generate 46.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BSP Financial Group vs. Latitude Financial Services
Performance |
| Timeline |
| BSP Financial Group |
| Latitude Financial |
BSP Financial and Latitude Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSP Financial and Latitude Financial
The main advantage of trading using opposite BSP Financial and Latitude Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSP Financial position performs unexpectedly, Latitude Financial 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 Latitude Financial will offset losses from the drop in Latitude Financial's long position.| BSP Financial vs. Retail Food Group | BSP Financial vs. Clime Investment Management | BSP Financial vs. Qbe Insurance Group | BSP Financial vs. Dicker Data |
| Latitude Financial vs. Aneka Tambang Tbk | Latitude Financial vs. Commonwealth Bank | Latitude Financial vs. BHP Group Limited | Latitude Financial vs. Rio Tinto |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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