Correlation Between British American and Bilibili
Can any of the company-specific risk be diversified away by investing in both British American and Bilibili 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 Bilibili 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 Bilibili, you can compare the effects of market volatilities on British American and Bilibili 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 Bilibili. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Bilibili.
Diversification Opportunities for British American and Bilibili
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and Bilibili is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Bilibili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilibili 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 Bilibili. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilibili has no effect on the direction of British American i.e., British American and Bilibili go up and down completely randomly.
Pair Corralation between British American and Bilibili
Assuming the 90 days trading horizon British American is expected to generate 1.71 times less return on investment than Bilibili. But when comparing it to its historical volatility, British American Tobacco is 3.95 times less risky than Bilibili. It trades about 0.07 of its potential returns per unit of risk. Bilibili is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,365 in Bilibili on October 16, 2024 and sell it today you would earn a total of 205.00 from holding Bilibili or generate 15.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Bilibili
Performance |
| Timeline |
| British American Tobacco |
| Bilibili |
British American and Bilibili Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Bilibili
The main advantage of trading using opposite British American and Bilibili positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Bilibili 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 Bilibili will offset losses from the drop in Bilibili's long position.| British American vs. MagnaChip Semiconductor Corp | British American vs. NXP Semiconductors NV | British American vs. Heidelberg Materials AG | British American vs. Goodyear Tire Rubber |
| Bilibili vs. AWILCO DRILLING PLC | Bilibili vs. Pembina Pipeline Corp | Bilibili vs. British American Tobacco | Bilibili vs. RCS MediaGroup SpA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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