Correlation Between British American and CORONGLRES CDIS/10/1
Can any of the company-specific risk be diversified away by investing in both British American and CORONGLRES CDIS/10/1 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 British American and CORONGLRES CDIS/10/1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and CORONGLRES CDIS101, you can compare the effects of market volatilities on British American and CORONGLRES CDIS/10/1 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 British American with a short position of CORONGLRES CDIS/10/1. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and CORONGLRES CDIS/10/1.
Diversification Opportunities for British American and CORONGLRES CDIS/10/1
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between British and CORONGLRES is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and CORONGLRES CDIS101 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CORONGLRES CDIS/10/1 and British American 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 British American Tobacco are associated (or correlated) with CORONGLRES CDIS/10/1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CORONGLRES CDIS/10/1 has no effect on the direction of British American i.e., British American and CORONGLRES CDIS/10/1 go up and down completely randomly.
Pair Corralation between British American and CORONGLRES CDIS/10/1
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.4 times more return on investment than CORONGLRES CDIS/10/1. However, British American Tobacco is 2.51 times less risky than CORONGLRES CDIS/10/1. It trades about 0.15 of its potential returns per unit of risk. CORONGLRES CDIS101 is currently generating about -0.07 per unit of risk. If you would invest 2,492 in British American Tobacco on September 4, 2024 and sell it today you would earn a total of 1,117 from holding British American Tobacco or generate 44.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
British American Tobacco vs. CORONGLRES CDIS101
Performance |
| Timeline |
| British American Tobacco |
| CORONGLRES CDIS/10/1 |
British American and CORONGLRES CDIS/10/1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and CORONGLRES CDIS/10/1
The main advantage of trading using opposite British American and CORONGLRES CDIS/10/1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, CORONGLRES CDIS/10/1 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 CORONGLRES CDIS/10/1 will offset losses from the drop in CORONGLRES CDIS/10/1's long position.| British American vs. British American Tobacco | British American vs. JAPAN TOBACCO UNSPADR12 | British American vs. Imperial Brands PLC |
| CORONGLRES CDIS/10/1 vs. AJ LUCAS GROUP | CORONGLRES CDIS/10/1 vs. Superior Plus Corp | CORONGLRES CDIS/10/1 vs. NMI Holdings | CORONGLRES CDIS/10/1 vs. Origin Agritech |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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