Correlation Between Beeks Trading and London Security
Can any of the company-specific risk be diversified away by investing in both Beeks Trading and London Security 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 Beeks Trading and London Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beeks Trading and London Security Plc, you can compare the effects of market volatilities on Beeks Trading and London Security 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 Beeks Trading with a short position of London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beeks Trading and London Security.
Diversification Opportunities for Beeks Trading and London Security
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beeks and London is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Beeks Trading and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security Plc and Beeks Trading 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 Beeks Trading are associated (or correlated) with London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of Beeks Trading i.e., Beeks Trading and London Security go up and down completely randomly.
Pair Corralation between Beeks Trading and London Security
Assuming the 90 days trading horizon Beeks Trading is expected to generate 2.7 times more return on investment than London Security. However, Beeks Trading is 2.7 times more volatile than London Security Plc. It trades about 0.11 of its potential returns per unit of risk. London Security Plc is currently generating about 0.08 per unit of risk. If you would invest 13,750 in Beeks Trading on November 3, 2024 and sell it today you would earn a total of 14,650 from holding Beeks Trading or generate 106.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Beeks Trading vs. London Security Plc
Performance |
| Timeline |
| Beeks Trading |
| London Security Plc |
Beeks Trading and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beeks Trading and London Security
The main advantage of trading using opposite Beeks Trading and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beeks Trading position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security's long position.| Beeks Trading vs. International Consolidated Airlines | Beeks Trading vs. Playtech Plc | Beeks Trading vs. Bloomsbury Publishing Plc | Beeks Trading vs. Rosslyn Data Technologies |
| London Security vs. Edita Food Industries | London Security vs. Nordic Semiconductor ASA | London Security vs. Associated British Foods | London Security vs. Ebro Foods |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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