Correlation Between BII Railway and Kering SA
Can any of the company-specific risk be diversified away by investing in both BII Railway and Kering SA 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 Kering SA 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 Kering SA, you can compare the effects of market volatilities on BII Railway and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Kering SA.
Diversification Opportunities for BII Railway and Kering SA
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BII and Kering is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of BII Railway i.e., BII Railway and Kering SA go up and down completely randomly.
Pair Corralation between BII Railway and Kering SA
Assuming the 90 days horizon BII Railway is expected to generate 30.28 times less return on investment than Kering SA. But when comparing it to its historical volatility, BII Railway Transportation is 1.61 times less risky than Kering SA. It trades about 0.01 of its potential returns per unit of risk. Kering SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 22,450 in Kering SA on September 12, 2024 and sell it today you would earn a total of 2,125 from holding Kering SA or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Kering SA
Performance |
| Timeline |
| BII Railway Transpor |
| Kering SA |
BII Railway and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Kering SA
The main advantage of trading using opposite BII Railway and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.| BII Railway vs. Cognizant Technology Solutions | BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS AB | BII Railway vs. Norsk Hydro ASA |
| Kering SA vs. Deckers Outdoor | Kering SA vs. Superior Plus Corp | Kering SA vs. NMI Holdings | Kering SA vs. SIVERS SEMICONDUCTORS AB |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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