Correlation Between Better World and Big Camera
Can any of the company-specific risk be diversified away by investing in both Better World and Big Camera 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 Better World and Big Camera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Better World Green and Big Camera, you can compare the effects of market volatilities on Better World and Big Camera 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 Better World with a short position of Big Camera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better World and Big Camera.
Diversification Opportunities for Better World and Big Camera
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Better and Big is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Better World Green and Big Camera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Camera and Better World 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 Better World Green are associated (or correlated) with Big Camera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Camera has no effect on the direction of Better World i.e., Better World and Big Camera go up and down completely randomly.
Pair Corralation between Better World and Big Camera
Assuming the 90 days trading horizon Better World Green is expected to under-perform the Big Camera. But the stock apears to be less risky and, when comparing its historical volatility, Better World Green is 19.22 times less risky than Big Camera. The stock trades about -0.01 of its potential returns per unit of risk. The Big Camera is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Big Camera on August 25, 2024 and sell it today you would lose (12.00) from holding Big Camera or give up 24.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Better World Green vs. Big Camera
Performance |
| Timeline |
| Better World Green |
| Big Camera |
Better World and Big Camera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Better World and Big Camera
The main advantage of trading using opposite Better World and Big Camera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better World position performs unexpectedly, Big Camera 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 Big Camera will offset losses from the drop in Big Camera's long position.| Better World vs. Tata Steel Public | Better World vs. Thaifoods Group Public | Better World vs. TMT Steel Public | Better World vs. The Erawan Group |
| Big Camera vs. Ananda Development Public | Big Camera vs. Beauty Community Public | Big Camera vs. Asia Aviation Public | Big Camera vs. Gunkul Engineering Public |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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