Correlation Between Bisalloy Steel and Kip McGrath
Can any of the company-specific risk be diversified away by investing in both Bisalloy Steel and Kip McGrath 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 Bisalloy Steel and Kip McGrath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bisalloy Steel Group and Kip McGrath Education, you can compare the effects of market volatilities on Bisalloy Steel and Kip McGrath 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 Bisalloy Steel with a short position of Kip McGrath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bisalloy Steel and Kip McGrath.
Diversification Opportunities for Bisalloy Steel and Kip McGrath
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bisalloy and Kip is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bisalloy Steel Group and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education and Bisalloy Steel 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 Bisalloy Steel Group are associated (or correlated) with Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Bisalloy Steel i.e., Bisalloy Steel and Kip McGrath go up and down completely randomly.
Pair Corralation between Bisalloy Steel and Kip McGrath
Assuming the 90 days trading horizon Bisalloy Steel Group is expected to generate 2.08 times more return on investment than Kip McGrath. However, Bisalloy Steel is 2.08 times more volatile than Kip McGrath Education. It trades about 0.22 of its potential returns per unit of risk. Kip McGrath Education is currently generating about 0.29 per unit of risk. If you would invest 306.00 in Bisalloy Steel Group on September 4, 2024 and sell it today you would earn a total of 75.00 from holding Bisalloy Steel Group or generate 24.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bisalloy Steel Group vs. Kip McGrath Education
Performance |
| Timeline |
| Bisalloy Steel Group |
| Kip McGrath Education |
Bisalloy Steel and Kip McGrath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bisalloy Steel and Kip McGrath
The main advantage of trading using opposite Bisalloy Steel and Kip McGrath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bisalloy Steel position performs unexpectedly, Kip McGrath 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 Kip McGrath will offset losses from the drop in Kip McGrath's long position.| Bisalloy Steel vs. Northern Star Resources | Bisalloy Steel vs. Evolution Mining | Bisalloy Steel vs. Sandfire Resources NL | Bisalloy Steel vs. Aneka Tambang Tbk |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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