Correlation Between BPI Energy and Arete Industries
Can any of the company-specific risk be diversified away by investing in both BPI Energy and Arete Industries 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 BPI Energy and Arete Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BPI Energy Holdings and Arete Industries, you can compare the effects of market volatilities on BPI Energy and Arete Industries 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 BPI Energy with a short position of Arete Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPI Energy and Arete Industries.
Diversification Opportunities for BPI Energy and Arete Industries
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BPI and Arete is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BPI Energy Holdings and Arete Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arete Industries and BPI Energy 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 BPI Energy Holdings are associated (or correlated) with Arete Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arete Industries has no effect on the direction of BPI Energy i.e., BPI Energy and Arete Industries go up and down completely randomly.
Pair Corralation between BPI Energy and Arete Industries
If you would invest 0.01 in Arete Industries on November 27, 2024 and sell it today you would earn a total of 0.00 from holding Arete Industries or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
BPI Energy Holdings vs. Arete Industries
Performance |
| Timeline |
| BPI Energy Holdings |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Arete Industries |
BPI Energy and Arete Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BPI Energy and Arete Industries
The main advantage of trading using opposite BPI Energy and Arete Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BPI Energy position performs unexpectedly, Arete Industries 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 Arete Industries will offset losses from the drop in Arete Industries' long position.The idea behind BPI Energy Holdings and Arete Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Arete Industries vs. AER Energy Resources | Arete Industries vs. Altura Energy | Arete Industries vs. Alamo Energy Corp | Arete Industries vs. ADX Energy |
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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