Correlation Between BHPA and APT Systems
Can any of the company-specific risk be diversified away by investing in both BHPA and APT Systems 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 BHPA and APT Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHPA Inc and APT Systems, you can compare the effects of market volatilities on BHPA and APT Systems 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 BHPA with a short position of APT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHPA and APT Systems.
Diversification Opportunities for BHPA and APT Systems
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BHPA and APT is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BHPA Inc and APT Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Systems and BHPA 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 BHPA Inc are associated (or correlated) with APT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Systems has no effect on the direction of BHPA i.e., BHPA and APT Systems go up and down completely randomly.
Pair Corralation between BHPA and APT Systems
Given the investment horizon of 90 days BHPA Inc is expected to generate 0.88 times more return on investment than APT Systems. However, BHPA Inc is 1.14 times less risky than APT Systems. It trades about 0.21 of its potential returns per unit of risk. APT Systems is currently generating about 0.05 per unit of risk. If you would invest 0.30 in BHPA Inc on September 1, 2024 and sell it today you would earn a total of 0.20 from holding BHPA Inc or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHPA Inc vs. APT Systems
Performance |
| Timeline |
| BHPA Inc |
| APT Systems |
BHPA and APT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHPA and APT Systems
The main advantage of trading using opposite BHPA and APT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHPA position performs unexpectedly, APT Systems 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 APT Systems will offset losses from the drop in APT Systems' long position.The idea behind BHPA Inc and APT Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| APT Systems vs. Protek Capital | APT Systems vs. On4 Communications | APT Systems vs. Bowmo Inc | APT Systems vs. BHPA Inc |
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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