Correlation Between Energy and Basanite
Can any of the company-specific risk be diversified away by investing in both Energy and Basanite 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 Energy and Basanite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy and Water and Basanite, you can compare the effects of market volatilities on Energy and Basanite 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 Energy with a short position of Basanite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy and Basanite.
Diversification Opportunities for Energy and Basanite
Poor diversification
The 3 months correlation between Energy and Basanite is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Energy and Water and Basanite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basanite and Energy 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 Energy and Water are associated (or correlated) with Basanite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basanite has no effect on the direction of Energy i.e., Energy and Basanite go up and down completely randomly.
Pair Corralation between Energy and Basanite
Given the investment horizon of 90 days Energy and Water is expected to under-perform the Basanite. But the otc stock apears to be less risky and, when comparing its historical volatility, Energy and Water is 1.05 times less risky than Basanite. The otc stock trades about 0.0 of its potential returns per unit of risk. The Basanite is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Basanite on November 5, 2024 and sell it today you would earn a total of 3.29 from holding Basanite or generate 219.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy and Water vs. Basanite
Performance |
| Timeline |
| Energy and Water |
| Basanite |
Energy and Basanite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy and Basanite
The main advantage of trading using opposite Energy and Basanite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy position performs unexpectedly, Basanite 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 Basanite will offset losses from the drop in Basanite's long position.| Energy vs. Vow ASA | Energy vs. Eestech | Energy vs. One World Universe | Energy vs. Bion Environmental Technologies |
| Basanite vs. Xinyi Glass Holdings | Basanite vs. CEMATRIX | Basanite vs. Anhui Conch Cement | Basanite vs. CEMEX SAB de |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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