Correlation Between Deep Well and BPI Energy
Can any of the company-specific risk be diversified away by investing in both Deep Well and BPI Energy 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 Deep Well and BPI Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deep Well Oil and BPI Energy Holdings, you can compare the effects of market volatilities on Deep Well and BPI Energy 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 Deep Well with a short position of BPI Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deep Well and BPI Energy.
Diversification Opportunities for Deep Well and BPI Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Deep and BPI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Deep Well Oil and BPI Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPI Energy Holdings and Deep Well 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 Deep Well Oil are associated (or correlated) with BPI Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPI Energy Holdings has no effect on the direction of Deep Well i.e., Deep Well and BPI Energy go up and down completely randomly.
Pair Corralation between Deep Well and BPI Energy
If you would invest 0.01 in BPI Energy Holdings on August 24, 2024 and sell it today you would earn a total of 0.00 from holding BPI Energy Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Deep Well Oil vs. BPI Energy Holdings
Performance |
| Timeline |
| Deep Well Oil |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BPI Energy Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Deep Well and BPI Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deep Well and BPI Energy
The main advantage of trading using opposite Deep Well and BPI Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deep Well position performs unexpectedly, BPI Energy 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 BPI Energy will offset losses from the drop in BPI Energy's long position.The idea behind Deep Well Oil and BPI Energy Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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