Correlation Between Bri Chem and Eskay Mining
Can any of the company-specific risk be diversified away by investing in both Bri Chem and Eskay Mining 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 Bri Chem and Eskay Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bri Chem Corp and Eskay Mining Corp, you can compare the effects of market volatilities on Bri Chem and Eskay Mining 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 Bri Chem with a short position of Eskay Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bri Chem and Eskay Mining.
Diversification Opportunities for Bri Chem and Eskay Mining
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bri and Eskay is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining Corp and Bri Chem 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 Bri Chem Corp are associated (or correlated) with Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of Bri Chem i.e., Bri Chem and Eskay Mining go up and down completely randomly.
Pair Corralation between Bri Chem and Eskay Mining
Assuming the 90 days trading horizon Bri Chem Corp is expected to generate 1.0 times more return on investment than Eskay Mining. However, Bri Chem is 1.0 times more volatile than Eskay Mining Corp. It trades about 0.28 of its potential returns per unit of risk. Eskay Mining Corp is currently generating about 0.1 per unit of risk. If you would invest 20.00 in Bri Chem Corp on September 20, 2024 and sell it today you would earn a total of 14.00 from holding Bri Chem Corp or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bri Chem Corp vs. Eskay Mining Corp
Performance |
| Timeline |
| Bri Chem Corp |
| Eskay Mining Corp |
Bri Chem and Eskay Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bri Chem and Eskay Mining
The main advantage of trading using opposite Bri Chem and Eskay Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bri Chem position performs unexpectedly, Eskay Mining 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 Eskay Mining will offset losses from the drop in Eskay Mining's long position.The idea behind Bri Chem Corp and Eskay Mining Corp 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.| Eskay Mining vs. Foraco International SA | Eskay Mining vs. Geodrill Limited | Eskay Mining vs. Bri Chem Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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