Correlation Between British Amer and Capricorn Metals
Can any of the company-specific risk be diversified away by investing in both British Amer and Capricorn Metals 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 British Amer and Capricorn Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bailador Technology Invest and Capricorn Metals, you can compare the effects of market volatilities on British Amer and Capricorn Metals 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 British Amer with a short position of Capricorn Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Capricorn Metals.
Diversification Opportunities for British Amer and Capricorn Metals
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Capricorn is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bailador Technology Invest and Capricorn Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Metals and British Amer 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 Bailador Technology Invest are associated (or correlated) with Capricorn Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Metals has no effect on the direction of British Amer i.e., British Amer and Capricorn Metals go up and down completely randomly.
Pair Corralation between British Amer and Capricorn Metals
Assuming the 90 days trading horizon British Amer is expected to generate 3.91 times less return on investment than Capricorn Metals. But when comparing it to its historical volatility, Bailador Technology Invest is 2.07 times less risky than Capricorn Metals. It trades about 0.03 of its potential returns per unit of risk. Capricorn Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 453.00 in Capricorn Metals on October 22, 2024 and sell it today you would earn a total of 263.00 from holding Capricorn Metals or generate 58.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bailador Technology Invest vs. Capricorn Metals
Performance |
| Timeline |
| Bailador Technology |
| Capricorn Metals |
British Amer and Capricorn Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Capricorn Metals
The main advantage of trading using opposite British Amer and Capricorn Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Capricorn Metals 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 Capricorn Metals will offset losses from the drop in Capricorn Metals' long position.| British Amer vs. Aneka Tambang Tbk | British Amer vs. Commonwealth Bank | British Amer vs. Commonwealth Bank of | British Amer vs. Australia and New |
| Capricorn Metals vs. Queste Communications | Capricorn Metals vs. Dexus Convenience Retail | Capricorn Metals vs. Charter Hall Retail | Capricorn Metals vs. Cosmo Metals |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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