Correlation Between BHPA and Social Life
Can any of the company-specific risk be diversified away by investing in both BHPA and Social Life 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 Social Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHPA Inc and Social Life Network, you can compare the effects of market volatilities on BHPA and Social Life 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 Social Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHPA and Social Life.
Diversification Opportunities for BHPA and Social Life
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between BHPA and Social is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BHPA Inc and Social Life Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Life Network 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 Social Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Life Network has no effect on the direction of BHPA i.e., BHPA and Social Life go up and down completely randomly.
Pair Corralation between BHPA and Social Life
Given the investment horizon of 90 days BHPA Inc is expected to under-perform the Social Life. But the pink sheet apears to be less risky and, when comparing its historical volatility, BHPA Inc is 1.27 times less risky than Social Life. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Social Life Network is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 0.04 in Social Life Network on October 24, 2024 and sell it today you would lose (0.01) from holding Social Life Network or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHPA Inc vs. Social Life Network
Performance |
| Timeline |
| BHPA Inc |
| Social Life Network |
BHPA and Social Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHPA and Social Life
The main advantage of trading using opposite BHPA and Social Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHPA position performs unexpectedly, Social Life 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 Social Life will offset losses from the drop in Social Life's long position.The idea behind BHPA Inc and Social Life Network 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.| Social Life vs. WH Group Limited | Social Life vs. Maptelligent | Social Life vs. Aquagold International | Social Life vs. High Yield Municipal Fund |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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