Correlation Between Baker Steel and Huddled Group
Can any of the company-specific risk be diversified away by investing in both Baker Steel and Huddled 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 Huddled 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 Huddled Group Plc, you can compare the effects of market volatilities on Baker Steel and Huddled 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 Huddled Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and Huddled Group.
Diversification Opportunities for Baker Steel and Huddled Group
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baker and Huddled is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and Huddled Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huddled Group Plc 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 Huddled Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huddled Group Plc has no effect on the direction of Baker Steel i.e., Baker Steel and Huddled Group go up and down completely randomly.
Pair Corralation between Baker Steel and Huddled Group
Assuming the 90 days trading horizon Baker Steel Resources is expected to generate 1.55 times more return on investment than Huddled Group. However, Baker Steel is 1.55 times more volatile than Huddled Group Plc. It trades about 0.05 of its potential returns per unit of risk. Huddled Group Plc is currently generating about 0.03 per unit of risk. If you would invest 3,950 in Baker Steel Resources on September 14, 2024 and sell it today you would earn a total of 1,850 from holding Baker Steel Resources or generate 46.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Steel Resources vs. Huddled Group Plc
Performance |
| Timeline |
| Baker Steel Resources |
| Huddled Group Plc |
Baker Steel and Huddled Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and Huddled Group
The main advantage of trading using opposite Baker Steel and Huddled Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel position performs unexpectedly, Huddled 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 Huddled Group will offset losses from the drop in Huddled Group's long position.| Baker Steel vs. Catalyst Media Group | Baker Steel vs. CATLIN GROUP | Baker Steel vs. Tamburi Investment Partners | Baker Steel vs. Magnora ASA |
| Huddled Group vs. Empire Metals Limited | Huddled Group vs. Taiwan Semiconductor Manufacturing | Huddled Group vs. Baker Steel Resources | Huddled Group vs. Nordic Semiconductor ASA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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