Correlation Between Baker Steel and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both Baker Steel and SoftBank Group 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 Baker Steel and SoftBank Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Steel Resources and SoftBank Group Corp, you can compare the effects of market volatilities on Baker Steel and SoftBank Group 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 Baker Steel with a short position of SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and SoftBank Group.
Diversification Opportunities for Baker Steel and SoftBank Group
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Baker and SoftBank is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp and Baker Steel 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 Baker Steel Resources are associated (or correlated) with SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Baker Steel i.e., Baker Steel and SoftBank Group go up and down completely randomly.
Pair Corralation between Baker Steel and SoftBank Group
Assuming the 90 days trading horizon Baker Steel Resources is expected to generate 0.77 times more return on investment than SoftBank Group. However, Baker Steel Resources is 1.29 times less risky than SoftBank Group. It trades about 0.38 of its potential returns per unit of risk. SoftBank Group Corp is currently generating about -0.03 per unit of risk. If you would invest 4,700 in Baker Steel Resources on August 25, 2024 and sell it today you would earn a total of 950.00 from holding Baker Steel Resources or generate 20.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Baker Steel Resources vs. SoftBank Group Corp
Performance |
| Timeline |
| Baker Steel Resources |
| SoftBank Group Corp |
Baker Steel and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and SoftBank Group
The main advantage of trading using opposite Baker Steel and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| Baker Steel vs. Catalyst Media Group | Baker Steel vs. Oncimmune Holdings plc | Baker Steel vs. Invesco Health Care | Baker Steel vs. Coor Service Management |
| SoftBank Group vs. Lords Grp Trading | SoftBank Group vs. JLEN Environmental Assets | SoftBank Group vs. Baker Steel Resources | SoftBank Group vs. Oakley Capital Investments |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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