Correlation Between EP Financial and Bisalloy Steel
Can any of the company-specific risk be diversified away by investing in both EP Financial and Bisalloy Steel 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 EP Financial and Bisalloy Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EP Financial Group and Bisalloy Steel Group, you can compare the effects of market volatilities on EP Financial and Bisalloy Steel 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 EP Financial with a short position of Bisalloy Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of EP Financial and Bisalloy Steel.
Diversification Opportunities for EP Financial and Bisalloy Steel
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EP1 and Bisalloy is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding EP Financial Group and Bisalloy Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisalloy Steel Group and EP Financial 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 EP Financial Group are associated (or correlated) with Bisalloy Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisalloy Steel Group has no effect on the direction of EP Financial i.e., EP Financial and Bisalloy Steel go up and down completely randomly.
Pair Corralation between EP Financial and Bisalloy Steel
Assuming the 90 days trading horizon EP Financial is expected to generate 3.17 times less return on investment than Bisalloy Steel. In addition to that, EP Financial is 1.04 times more volatile than Bisalloy Steel Group. It trades about 0.02 of its total potential returns per unit of risk. Bisalloy Steel Group is currently generating about 0.06 per unit of volatility. If you would invest 187.00 in Bisalloy Steel Group on September 2, 2024 and sell it today you would earn a total of 186.00 from holding Bisalloy Steel Group or generate 99.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EP Financial Group vs. Bisalloy Steel Group
Performance |
| Timeline |
| EP Financial Group |
| Bisalloy Steel Group |
EP Financial and Bisalloy Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EP Financial and Bisalloy Steel
The main advantage of trading using opposite EP Financial and Bisalloy Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EP Financial position performs unexpectedly, Bisalloy Steel 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 Bisalloy Steel will offset losses from the drop in Bisalloy Steel's long position.| EP Financial vs. WA1 Resources | EP Financial vs. Predictive Discovery | EP Financial vs. Cooper Metals | EP Financial vs. OD6 Metals |
| Bisalloy Steel vs. Northern Star Resources | Bisalloy Steel vs. Evolution Mining | Bisalloy Steel vs. Sandfire Resources NL | Bisalloy Steel vs. Aneka Tambang Tbk |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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