Correlation Between Diamond Building and BCPG Public
Can any of the company-specific risk be diversified away by investing in both Diamond Building and BCPG Public 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 Diamond Building and BCPG Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Building Products and BCPG Public, you can compare the effects of market volatilities on Diamond Building and BCPG Public 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 Diamond Building with a short position of BCPG Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Building and BCPG Public.
Diversification Opportunities for Diamond Building and BCPG Public
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Diamond and BCPG is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Building Products and BCPG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCPG Public and Diamond Building 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 Diamond Building Products are associated (or correlated) with BCPG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCPG Public has no effect on the direction of Diamond Building i.e., Diamond Building and BCPG Public go up and down completely randomly.
Pair Corralation between Diamond Building and BCPG Public
Assuming the 90 days trading horizon Diamond Building Products is expected to under-perform the BCPG Public. But the stock apears to be less risky and, when comparing its historical volatility, Diamond Building Products is 2.6 times less risky than BCPG Public. The stock trades about -0.21 of its potential returns per unit of risk. The BCPG Public is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 575.00 in BCPG Public on September 14, 2024 and sell it today you would lose (15.00) from holding BCPG Public or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Building Products vs. BCPG Public
Performance |
| Timeline |
| Diamond Building Products |
| BCPG Public |
Diamond Building and BCPG Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Building and BCPG Public
The main advantage of trading using opposite Diamond Building and BCPG Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Building position performs unexpectedly, BCPG Public 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 BCPG Public will offset losses from the drop in BCPG Public's long position.| Diamond Building vs. Thantawan Industry Public | Diamond Building vs. The Erawan Group | Diamond Building vs. Jay Mart Public | Diamond Building vs. Airports of Thailand |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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