Correlation Between BII Railway and Transport International
Can any of the company-specific risk be diversified away by investing in both BII Railway and Transport International 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 Transport International 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 Transport International Holdings, you can compare the effects of market volatilities on BII Railway and Transport International 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 Transport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Transport International.
Diversification Opportunities for BII Railway and Transport International
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BII and Transport is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International 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 Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of BII Railway i.e., BII Railway and Transport International go up and down completely randomly.
Pair Corralation between BII Railway and Transport International
Assuming the 90 days horizon BII Railway Transportation is expected to generate 0.76 times more return on investment than Transport International. However, BII Railway Transportation is 1.32 times less risky than Transport International. It trades about 0.1 of its potential returns per unit of risk. Transport International Holdings is currently generating about -0.04 per unit of risk. If you would invest 2.60 in BII Railway Transportation on August 25, 2024 and sell it today you would earn a total of 0.10 from holding BII Railway Transportation or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Transport International Holdin
Performance |
| Timeline |
| BII Railway Transpor |
| Transport International |
BII Railway and Transport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Transport International
The main advantage of trading using opposite BII Railway and Transport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Transport International 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 Transport International will offset losses from the drop in Transport International's long position.| BII Railway vs. AEGEAN AIRLINES | BII Railway vs. JAPAN AIRLINES | BII Railway vs. Gladstone Investment | BII Railway vs. MGIC INVESTMENT |
| Transport International vs. CRRC Limited | Transport International vs. Central Japan Railway | Transport International vs. Westinghouse Air Brake | Transport International vs. Superior Plus Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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