Correlation Between B Investments and ODIN Investments
Can any of the company-specific risk be diversified away by investing in both B Investments and ODIN Investments 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 ODIN Investments 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 ODIN Investments, you can compare the effects of market volatilities on B Investments and ODIN Investments 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 ODIN Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Investments and ODIN Investments.
Diversification Opportunities for B Investments and ODIN Investments
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BINV and ODIN is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding B Investments Holding and ODIN Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODIN Investments 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 ODIN Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODIN Investments has no effect on the direction of B Investments i.e., B Investments and ODIN Investments go up and down completely randomly.
Pair Corralation between B Investments and ODIN Investments
Assuming the 90 days trading horizon B Investments Holding is expected to generate 0.61 times more return on investment than ODIN Investments. However, B Investments Holding is 1.64 times less risky than ODIN Investments. It trades about 0.09 of its potential returns per unit of risk. ODIN Investments is currently generating about -0.16 per unit of risk. If you would invest 2,484 in B Investments Holding on September 12, 2024 and sell it today you would earn a total of 66.00 from holding B Investments Holding or generate 2.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Investments Holding vs. ODIN Investments
Performance |
| Timeline |
| B Investments Holding |
| ODIN Investments |
B Investments and ODIN Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Investments and ODIN Investments
The main advantage of trading using opposite B Investments and ODIN Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Investments position performs unexpectedly, ODIN Investments 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 ODIN Investments will offset losses from the drop in ODIN Investments' 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 |
| ODIN Investments vs. Paint Chemicals Industries | ODIN Investments vs. Reacap Financial Investments | ODIN Investments vs. Egyptians For Investment | ODIN Investments vs. Misr Oils Soap |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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