Correlation Between British Amer and Bidvest
Can any of the company-specific risk be diversified away by investing in both British Amer and Bidvest 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 Bidvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Bidvest Group, you can compare the effects of market volatilities on British Amer and Bidvest 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 Bidvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Bidvest.
Diversification Opportunities for British Amer and Bidvest
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between British and Bidvest is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Bidvest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bidvest Group 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 British American Tobacco are associated (or correlated) with Bidvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bidvest Group has no effect on the direction of British Amer i.e., British Amer and Bidvest go up and down completely randomly.
Pair Corralation between British Amer and Bidvest
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.86 times more return on investment than Bidvest. However, British American Tobacco is 1.17 times less risky than Bidvest. It trades about 0.39 of its potential returns per unit of risk. Bidvest Group is currently generating about -0.13 per unit of risk. If you would invest 6,160,000 in British American Tobacco on September 5, 2024 and sell it today you would earn a total of 599,200 from holding British American Tobacco or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Bidvest Group
Performance |
| Timeline |
| British American Tobacco |
| Bidvest Group |
British Amer and Bidvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Bidvest
The main advantage of trading using opposite British Amer and Bidvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Bidvest 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 Bidvest will offset losses from the drop in Bidvest's long position.| British Amer vs. Sasol Ltd Bee | British Amer vs. Centaur Bci Balanced | British Amer vs. Growthpoint Properties | British Amer vs. Coronation Global Equity |
| Bidvest vs. Harmony Gold Mining | Bidvest vs. Europa Metals | Bidvest vs. British American Tobacco | Bidvest vs. Afine 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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