Correlation Between BII Railway and Strategic Investments
Can any of the company-specific risk be diversified away by investing in both BII Railway and Strategic Investments 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 Strategic Investments 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 Strategic Investments AS, you can compare the effects of market volatilities on BII Railway and Strategic Investments 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 Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Strategic Investments.
Diversification Opportunities for BII Railway and Strategic Investments
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BII and Strategic is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments 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 Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of BII Railway i.e., BII Railway and Strategic Investments go up and down completely randomly.
Pair Corralation between BII Railway and Strategic Investments
Assuming the 90 days horizon BII Railway is expected to generate 1.82 times less return on investment than Strategic Investments. But when comparing it to its historical volatility, BII Railway Transportation is 1.37 times less risky than Strategic Investments. It trades about 0.02 of its potential returns per unit of risk. Strategic Investments AS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Strategic Investments AS on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Strategic Investments AS or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Strategic Investments AS
Performance |
| Timeline |
| BII Railway Transpor |
| Strategic Investments |
BII Railway and Strategic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Strategic Investments
The main advantage of trading using opposite BII Railway and Strategic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Strategic Investments 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 Strategic Investments will offset losses from the drop in Strategic Investments' long position.| BII Railway vs. Entravision Communications | BII Railway vs. Consolidated Communications Holdings | BII Railway vs. Chunghwa Telecom Co | BII Railway vs. Verizon Communications |
| Strategic Investments vs. Japan Tobacco | Strategic Investments vs. MAROC TELECOM | Strategic Investments vs. REGAL HOTEL INTL | Strategic Investments vs. Host Hotels Resorts |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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