Correlation Between BPS TECHNOLOGY and Lease IT
Can any of the company-specific risk be diversified away by investing in both BPS TECHNOLOGY and Lease IT 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 BPS TECHNOLOGY and Lease IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BPS TECHNOLOGY PUBLIC and Lease IT Public, you can compare the effects of market volatilities on BPS TECHNOLOGY and Lease IT 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 BPS TECHNOLOGY with a short position of Lease IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPS TECHNOLOGY and Lease IT.
Diversification Opportunities for BPS TECHNOLOGY and Lease IT
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BPS and Lease is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BPS TECHNOLOGY PUBLIC and Lease IT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lease IT Public and BPS TECHNOLOGY 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 BPS TECHNOLOGY PUBLIC are associated (or correlated) with Lease IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lease IT Public has no effect on the direction of BPS TECHNOLOGY i.e., BPS TECHNOLOGY and Lease IT go up and down completely randomly.
Pair Corralation between BPS TECHNOLOGY and Lease IT
Assuming the 90 days trading horizon BPS TECHNOLOGY PUBLIC is expected to under-perform the Lease IT. But the stock apears to be less risky and, when comparing its historical volatility, BPS TECHNOLOGY PUBLIC is 1.73 times less risky than Lease IT. The stock trades about -0.21 of its potential returns per unit of risk. The Lease IT Public is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Lease IT Public on October 22, 2024 and sell it today you would lose (2.00) from holding Lease IT Public or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BPS TECHNOLOGY PUBLIC vs. Lease IT Public
Performance |
| Timeline |
| BPS TECHNOLOGY PUBLIC |
| Lease IT Public |
BPS TECHNOLOGY and Lease IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BPS TECHNOLOGY and Lease IT
The main advantage of trading using opposite BPS TECHNOLOGY and Lease IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BPS TECHNOLOGY position performs unexpectedly, Lease IT 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 Lease IT will offset losses from the drop in Lease IT's long position.| BPS TECHNOLOGY vs. Delta Electronics Public | BPS TECHNOLOGY vs. Delta Electronics Public | BPS TECHNOLOGY vs. Airports of Thailand | BPS TECHNOLOGY vs. Airports of Thailand |
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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