Correlation Between Ba Ria and Global Electrical
Can any of the company-specific risk be diversified away by investing in both Ba Ria and Global Electrical 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 Ba Ria and Global Electrical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ba Ria Thermal and Global Electrical Technology, you can compare the effects of market volatilities on Ba Ria and Global Electrical 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 Ba Ria with a short position of Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ba Ria and Global Electrical.
Diversification Opportunities for Ba Ria and Global Electrical
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BTP and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ba Ria Thermal and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical and Ba Ria 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 Ba Ria Thermal are associated (or correlated) with Global Electrical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Electrical has no effect on the direction of Ba Ria i.e., Ba Ria and Global Electrical go up and down completely randomly.
Pair Corralation between Ba Ria and Global Electrical
Assuming the 90 days trading horizon Ba Ria Thermal is expected to under-perform the Global Electrical. But the stock apears to be less risky and, when comparing its historical volatility, Ba Ria Thermal is 6.71 times less risky than Global Electrical. The stock trades about -0.47 of its potential returns per unit of risk. The Global Electrical Technology is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,800,000 in Global Electrical Technology on September 2, 2024 and sell it today you would lose (150,000) from holding Global Electrical Technology or give up 5.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 54.55% |
| Values | Daily Returns |
Ba Ria Thermal vs. Global Electrical Technology
Performance |
| Timeline |
| Ba Ria Thermal |
| Global Electrical |
Ba Ria and Global Electrical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ba Ria and Global Electrical
The main advantage of trading using opposite Ba Ria and Global Electrical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ba Ria position performs unexpectedly, Global Electrical 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 Global Electrical will offset losses from the drop in Global Electrical's long position.The idea behind Ba Ria Thermal and Global Electrical Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Global Electrical vs. DOMESCO Medical Import | Global Electrical vs. Binh Duong Trade | Global Electrical vs. Petrovietnam Technical Services | Global Electrical vs. VTC Telecommunications JSC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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