Correlation Between BigBen Interactive and Solutions
Can any of the company-specific risk be diversified away by investing in both BigBen Interactive and Solutions 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 BigBen Interactive and Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BigBen Interactive and Solutions 30 SE, you can compare the effects of market volatilities on BigBen Interactive and Solutions 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 BigBen Interactive with a short position of Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of BigBen Interactive and Solutions.
Diversification Opportunities for BigBen Interactive and Solutions
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BigBen and Solutions is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BigBen Interactive and Solutions 30 SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solutions 30 SE and BigBen Interactive 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 BigBen Interactive are associated (or correlated) with Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solutions 30 SE has no effect on the direction of BigBen Interactive i.e., BigBen Interactive and Solutions go up and down completely randomly.
Pair Corralation between BigBen Interactive and Solutions
Assuming the 90 days trading horizon BigBen Interactive is expected to generate 0.57 times more return on investment than Solutions. However, BigBen Interactive is 1.75 times less risky than Solutions. It trades about -0.81 of its potential returns per unit of risk. Solutions 30 SE is currently generating about -0.49 per unit of risk. If you would invest 199.00 in BigBen Interactive on September 1, 2024 and sell it today you would lose (53.00) from holding BigBen Interactive or give up 26.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BigBen Interactive vs. Solutions 30 SE
Performance |
| Timeline |
| BigBen Interactive |
| Solutions 30 SE |
BigBen Interactive and Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BigBen Interactive and Solutions
The main advantage of trading using opposite BigBen Interactive and Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BigBen Interactive position performs unexpectedly, Solutions 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 Solutions will offset losses from the drop in Solutions' long position.| BigBen Interactive vs. Nacon Sa | BigBen Interactive vs. Chargeurs SA | BigBen Interactive vs. Claranova SE | BigBen Interactive vs. Trigano SA |
| Solutions vs. LVMH Mot Hennessy | Solutions vs. LOreal SA | Solutions vs. Hermes International SCA | Solutions vs. Manitou BF SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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