Correlation Between Eastern Power and BCPG Public
Can any of the company-specific risk be diversified away by investing in both Eastern Power 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 Eastern Power and BCPG Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Power Group and BCPG Public, you can compare the effects of market volatilities on Eastern Power 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 Eastern Power with a short position of BCPG Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Power and BCPG Public.
Diversification Opportunities for Eastern Power and BCPG Public
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastern and BCPG is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Power Group and BCPG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCPG Public and Eastern Power 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 Eastern Power Group 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 Eastern Power i.e., Eastern Power and BCPG Public go up and down completely randomly.
Pair Corralation between Eastern Power and BCPG Public
Assuming the 90 days horizon Eastern Power Group is expected to under-perform the BCPG Public. In addition to that, Eastern Power is 1.14 times more volatile than BCPG Public. It trades about -0.07 of its total potential returns per unit of risk. BCPG Public is currently generating about 0.03 per unit of volatility. If you would invest 625.00 in BCPG Public on November 2, 2024 and sell it today you would earn a total of 35.00 from holding BCPG Public or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Power Group vs. BCPG Public
Performance |
| Timeline |
| Eastern Power Group |
| BCPG Public |
Eastern Power and BCPG Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Power and BCPG Public
The main advantage of trading using opposite Eastern Power and BCPG Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Power 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.| Eastern Power vs. BCPG Public | Eastern Power vs. Diamond Building Products | Eastern Power vs. Earth Tech Environment | Eastern Power vs. TPI Polene Power |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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