Correlation Between Bri Chem and Entree Resources
Can any of the company-specific risk be diversified away by investing in both Bri Chem and Entree Resources 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 Entree Resources 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 Entree Resources, you can compare the effects of market volatilities on Bri Chem and Entree Resources 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 Entree Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bri Chem and Entree Resources.
Diversification Opportunities for Bri Chem and Entree Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bri and Entree is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and Entree Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entree Resources 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 Entree Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entree Resources has no effect on the direction of Bri Chem i.e., Bri Chem and Entree Resources go up and down completely randomly.
Pair Corralation between Bri Chem and Entree Resources
Assuming the 90 days trading horizon Bri Chem Corp is expected to generate 3.2 times more return on investment than Entree Resources. However, Bri Chem is 3.2 times more volatile than Entree Resources. It trades about 0.28 of its potential returns per unit of risk. Entree Resources is currently generating about 0.17 per unit of risk. If you would invest 23.00 in Bri Chem Corp on September 19, 2024 and sell it today you would earn a total of 16.00 from holding Bri Chem Corp or generate 69.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bri Chem Corp vs. Entree Resources
Performance |
| Timeline |
| Bri Chem Corp |
| Entree Resources |
Bri Chem and Entree Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bri Chem and Entree Resources
The main advantage of trading using opposite Bri Chem and Entree Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bri Chem position performs unexpectedly, Entree Resources 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 Entree Resources will offset losses from the drop in Entree Resources' long position.The idea behind Bri Chem Corp and Entree Resources 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.| Entree Resources vs. Foraco International SA | Entree Resources vs. Geodrill Limited | Entree Resources vs. Major Drilling Group | Entree Resources 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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