Correlation Between BMTC and Eros Resources
Can any of the company-specific risk be diversified away by investing in both BMTC and Eros Resources 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 BMTC and Eros Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMTC Group and Eros Resources Corp, you can compare the effects of market volatilities on BMTC and Eros Resources 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 BMTC with a short position of Eros Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMTC and Eros Resources.
Diversification Opportunities for BMTC and Eros Resources
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between BMTC and Eros is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BMTC Group and Eros Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros Resources Corp and BMTC 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 BMTC Group are associated (or correlated) with Eros Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros Resources Corp has no effect on the direction of BMTC i.e., BMTC and Eros Resources go up and down completely randomly.
Pair Corralation between BMTC and Eros Resources
Assuming the 90 days trading horizon BMTC is expected to generate 5.42 times less return on investment than Eros Resources. But when comparing it to its historical volatility, BMTC Group is 3.57 times less risky than Eros Resources. It trades about 0.03 of its potential returns per unit of risk. Eros Resources Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Eros Resources Corp on September 1, 2024 and sell it today you would earn a total of 0.50 from holding Eros Resources Corp or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BMTC Group vs. Eros Resources Corp
Performance |
| Timeline |
| BMTC Group |
| Eros Resources Corp |
BMTC and Eros Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BMTC and Eros Resources
The main advantage of trading using opposite BMTC and Eros Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMTC position performs unexpectedly, Eros Resources 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 Eros Resources will offset losses from the drop in Eros Resources' long position.| BMTC vs. Leons Furniture Limited | BMTC vs. Lassonde Industries | BMTC vs. TWC Enterprises | BMTC vs. Supremex |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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