Correlation Between BRIT AMER and CHINA OIL
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and CHINA OIL 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 BRIT AMER and CHINA OIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and CHINA OIL AND, you can compare the effects of market volatilities on BRIT AMER and CHINA OIL 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 BRIT AMER with a short position of CHINA OIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and CHINA OIL.
Diversification Opportunities for BRIT AMER and CHINA OIL
Good diversification
The 3 months correlation between BRIT and CHINA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and CHINA OIL AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA OIL AND and BRIT AMER 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 BRIT AMER TOBACCO are associated (or correlated) with CHINA OIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA OIL AND has no effect on the direction of BRIT AMER i.e., BRIT AMER and CHINA OIL go up and down completely randomly.
Pair Corralation between BRIT AMER and CHINA OIL
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 3.11 times more return on investment than CHINA OIL. However, BRIT AMER is 3.11 times more volatile than CHINA OIL AND. It trades about 0.17 of its potential returns per unit of risk. CHINA OIL AND is currently generating about 0.08 per unit of risk. If you would invest 2,687 in BRIT AMER TOBACCO on September 3, 2024 and sell it today you would earn a total of 904.00 from holding BRIT AMER TOBACCO or generate 33.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. CHINA OIL AND
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| CHINA OIL AND |
BRIT AMER and CHINA OIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and CHINA OIL
The main advantage of trading using opposite BRIT AMER and CHINA OIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, CHINA OIL 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 CHINA OIL will offset losses from the drop in CHINA OIL's long position.| BRIT AMER vs. FEMALE HEALTH | BRIT AMER vs. PARKEN Sport Entertainment | BRIT AMER vs. Amkor Technology | BRIT AMER vs. CVS Health |
| CHINA OIL vs. INSURANCE AUST GRP | CHINA OIL vs. SCANSOURCE | CHINA OIL vs. Japan Post Insurance | CHINA OIL vs. QBE Insurance Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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