Correlation Between BII Railway and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both BII Railway and Berkshire Hathaway 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 BII Railway and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Berkshire Hathaway, you can compare the effects of market volatilities on BII Railway and Berkshire Hathaway 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 BII Railway with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Berkshire Hathaway.
Diversification Opportunities for BII Railway and Berkshire Hathaway
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between BII and Berkshire is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and BII Railway 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 BII Railway Transportation are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of BII Railway i.e., BII Railway and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between BII Railway and Berkshire Hathaway
Assuming the 90 days horizon BII Railway Transportation is expected to generate 4.26 times more return on investment than Berkshire Hathaway. However, BII Railway is 4.26 times more volatile than Berkshire Hathaway. It trades about 0.03 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.12 per unit of risk. If you would invest 2.25 in BII Railway Transportation on September 4, 2024 and sell it today you would earn a total of 0.30 from holding BII Railway Transportation or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Berkshire Hathaway
Performance |
| Timeline |
| BII Railway Transpor |
| Berkshire Hathaway |
BII Railway and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Berkshire Hathaway
The main advantage of trading using opposite BII Railway and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| BII Railway vs. FUJITSU LTD ADR | BII Railway vs. Superior Plus Corp | BII Railway vs. NMI Holdings | BII Railway vs. Origin Agritech |
| Berkshire Hathaway vs. Liberty Broadband | Berkshire Hathaway vs. Mobilezone Holding AG | Berkshire Hathaway vs. BII Railway Transportation | Berkshire Hathaway vs. Cogent Communications Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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