Correlation Between BPI Energy and Deep Well
Can any of the company-specific risk be diversified away by investing in both BPI Energy and Deep Well 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 Deep Well 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 Deep Well Oil, you can compare the effects of market volatilities on BPI Energy and Deep Well 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 Deep Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPI Energy and Deep Well.
Diversification Opportunities for BPI Energy and Deep Well
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BPI and Deep is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BPI Energy Holdings and Deep Well Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Well Oil 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 Deep Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Well Oil has no effect on the direction of BPI Energy i.e., BPI Energy and Deep Well go up and down completely randomly.
Pair Corralation between BPI Energy and Deep Well
If you would invest (100.00) in Deep Well Oil on August 24, 2024 and sell it today you would earn a total of 100.00 from holding Deep Well Oil or generate -100.0% 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. Deep Well Oil
Performance |
| Timeline |
| BPI Energy Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Deep Well Oil |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BPI Energy and Deep Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BPI Energy and Deep Well
The main advantage of trading using opposite BPI Energy and Deep Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BPI Energy position performs unexpectedly, Deep Well 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 Deep Well will offset losses from the drop in Deep Well's long position.The idea behind BPI Energy Holdings and Deep Well Oil 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.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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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