Correlation Between Bip Investment and Jade Leader
Can any of the company-specific risk be diversified away by investing in both Bip Investment and Jade Leader 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 Bip Investment and Jade Leader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bip Investment Corp and Jade Leader Corp, you can compare the effects of market volatilities on Bip Investment and Jade Leader 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 Bip Investment with a short position of Jade Leader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bip Investment and Jade Leader.
Diversification Opportunities for Bip Investment and Jade Leader
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bip and Jade is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bip Investment Corp and Jade Leader Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jade Leader Corp and Bip Investment 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 Bip Investment Corp are associated (or correlated) with Jade Leader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jade Leader Corp has no effect on the direction of Bip Investment i.e., Bip Investment and Jade Leader go up and down completely randomly.
Pair Corralation between Bip Investment and Jade Leader
Assuming the 90 days trading horizon Bip Investment Corp is expected to generate 0.09 times more return on investment than Jade Leader. However, Bip Investment Corp is 11.57 times less risky than Jade Leader. It trades about 0.08 of its potential returns per unit of risk. Jade Leader Corp is currently generating about -0.03 per unit of risk. If you would invest 2,600 in Bip Investment Corp on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Bip Investment Corp or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Bip Investment Corp vs. Jade Leader Corp
Performance |
| Timeline |
| Bip Investment Corp |
| Jade Leader Corp |
Bip Investment and Jade Leader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bip Investment and Jade Leader
The main advantage of trading using opposite Bip Investment and Jade Leader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bip Investment position performs unexpectedly, Jade Leader 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 Jade Leader will offset losses from the drop in Jade Leader's long position.The idea behind Bip Investment Corp and Jade Leader Corp 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.
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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