Correlation Between British Amer and Trematon Capital
Can any of the company-specific risk be diversified away by investing in both British Amer and Trematon Capital 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 Trematon Capital 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 Trematon Capital Investments, you can compare the effects of market volatilities on British Amer and Trematon Capital 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 Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Trematon Capital.
Diversification Opportunities for British Amer and Trematon Capital
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between British and Trematon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of British Amer i.e., British Amer and Trematon Capital go up and down completely randomly.
Pair Corralation between British Amer and Trematon Capital
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.35 times more return on investment than Trematon Capital. However, British American Tobacco is 2.85 times less risky than Trematon Capital. It trades about 0.47 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about 0.01 per unit of risk. If you would invest 6,154,700 in British American Tobacco on August 29, 2024 and sell it today you would earn a total of 686,000 from holding British American Tobacco or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Trematon Capital Investments
Performance |
| Timeline |
| British American Tobacco |
| Trematon Capital Inv |
British Amer and Trematon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Trematon Capital
The main advantage of trading using opposite British Amer and Trematon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Trematon Capital 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 Trematon Capital will offset losses from the drop in Trematon Capital's long position.| British Amer vs. Safari Investments RSA | British Amer vs. African Media Entertainment | British Amer vs. HomeChoice Investments | British Amer vs. Reinet Investments SCA |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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