Correlation Between Bri-Chem Corp and Cactus
Can any of the company-specific risk be diversified away by investing in both Bri-Chem Corp and Cactus 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 Corp and Cactus 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 Cactus Inc, you can compare the effects of market volatilities on Bri-Chem Corp and Cactus 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 Corp with a short position of Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bri-Chem Corp and Cactus.
Diversification Opportunities for Bri-Chem Corp and Cactus
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bri-Chem and Cactus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc and Bri-Chem Corp 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 Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of Bri-Chem Corp i.e., Bri-Chem Corp and Cactus go up and down completely randomly.
Pair Corralation between Bri-Chem Corp and Cactus
Assuming the 90 days horizon Bri Chem Corp is expected to generate 1.45 times more return on investment than Cactus. However, Bri-Chem Corp is 1.45 times more volatile than Cactus Inc. It trades about 0.38 of its potential returns per unit of risk. Cactus Inc is currently generating about 0.28 per unit of risk. If you would invest 12.00 in Bri Chem Corp on August 27, 2024 and sell it today you would earn a total of 5.00 from holding Bri Chem Corp or generate 41.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bri Chem Corp vs. Cactus Inc
Performance |
| Timeline |
| Bri Chem Corp |
| Cactus Inc |
Bri-Chem Corp and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bri-Chem Corp and Cactus
The main advantage of trading using opposite Bri-Chem Corp and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bri-Chem Corp position performs unexpectedly, Cactus 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 Cactus will offset losses from the drop in Cactus' long position.| Bri-Chem Corp vs. Dawson Geophysical | Bri-Chem Corp vs. NCS Multistage Holdings | Bri-Chem Corp vs. NXT Energy Solutions | Bri-Chem Corp vs. Bristow Group |
| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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