Correlation Between B Investments and International
Can any of the company-specific risk be diversified away by investing in both B Investments and International 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 B Investments and International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Investments Holding and International Co For, you can compare the effects of market volatilities on B Investments and International 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 B Investments with a short position of International. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Investments and International.
Diversification Opportunities for B Investments and International
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BINV and International is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding B Investments Holding and International Co For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Co For and B Investments 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 B Investments Holding are associated (or correlated) with International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Co For has no effect on the direction of B Investments i.e., B Investments and International go up and down completely randomly.
Pair Corralation between B Investments and International
Assuming the 90 days trading horizon B Investments is expected to generate 5.88 times less return on investment than International. But when comparing it to its historical volatility, B Investments Holding is 10.98 times less risky than International. It trades about 0.07 of its potential returns per unit of risk. International Co For is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,389 in International Co For on September 20, 2024 and sell it today you would lose (3,056) from holding International Co For or give up 90.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Investments Holding vs. International Co For
Performance |
| Timeline |
| B Investments Holding |
| International Co For |
B Investments and International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Investments and International
The main advantage of trading using opposite B Investments and International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Investments position performs unexpectedly, International 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 International will offset losses from the drop in International's long position.| B Investments vs. Paint Chemicals Industries | B Investments vs. Reacap Financial Investments | B Investments vs. Egyptians For Investment | B Investments vs. Misr Oils Soap |
| International vs. B Investments Holding | International vs. Egyptians For Investment | International vs. Dice Sport Casual | International vs. Golden Textiles Clothes |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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