Correlation Between BSP Financial and MotorCycle Holdings
Can any of the company-specific risk be diversified away by investing in both BSP Financial and MotorCycle Holdings 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 MotorCycle Holdings 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 MotorCycle Holdings, you can compare the effects of market volatilities on BSP Financial and MotorCycle Holdings 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 MotorCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and MotorCycle Holdings.
Diversification Opportunities for BSP Financial and MotorCycle Holdings
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between BSP and MotorCycle is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and MotorCycle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MotorCycle Holdings 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 MotorCycle Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MotorCycle Holdings has no effect on the direction of BSP Financial i.e., BSP Financial and MotorCycle Holdings go up and down completely randomly.
Pair Corralation between BSP Financial and MotorCycle Holdings
Assuming the 90 days trading horizon BSP Financial Group is expected to generate 0.62 times more return on investment than MotorCycle Holdings. However, BSP Financial Group is 1.6 times less risky than MotorCycle Holdings. It trades about 0.07 of its potential returns per unit of risk. MotorCycle Holdings is currently generating about -0.01 per unit of risk. If you would invest 486.00 in BSP Financial Group on August 29, 2024 and sell it today you would earn a total of 164.00 from holding BSP Financial Group or generate 33.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BSP Financial Group vs. MotorCycle Holdings
Performance |
| Timeline |
| BSP Financial Group |
| MotorCycle Holdings |
BSP Financial and MotorCycle Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSP Financial and MotorCycle Holdings
The main advantage of trading using opposite BSP Financial and MotorCycle Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSP Financial position performs unexpectedly, MotorCycle Holdings 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 MotorCycle Holdings will offset losses from the drop in MotorCycle Holdings' long position.| BSP Financial vs. Champion Iron | BSP Financial vs. Ridley | BSP Financial vs. Peel Mining | BSP Financial vs. Australian Dairy Farms |
| MotorCycle Holdings vs. Summit Resources Limited | MotorCycle Holdings vs. Champion Iron | MotorCycle Holdings vs. Ridley | MotorCycle Holdings vs. Peel Mining |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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