Correlation Between Hermès International and BII Railway
Can any of the company-specific risk be diversified away by investing in both Hermès International and BII Railway 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 Hermès International and BII Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herms International Socit and BII Railway Transportation, you can compare the effects of market volatilities on Hermès International and BII Railway 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 Hermès International with a short position of BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermès International and BII Railway.
Diversification Opportunities for Hermès International and BII Railway
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hermès and BII is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Herms International Socit and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor and Hermès International 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 Herms International Socit are associated (or correlated) with BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Hermès International i.e., Hermès International and BII Railway go up and down completely randomly.
Pair Corralation between Hermès International and BII Railway
Assuming the 90 days horizon Herms International Socit is expected to generate 1.07 times more return on investment than BII Railway. However, Hermès International is 1.07 times more volatile than BII Railway Transportation. It trades about 0.22 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.03 per unit of risk. If you would invest 215,900 in Herms International Socit on November 7, 2024 and sell it today you would earn a total of 55,200 from holding Herms International Socit or generate 25.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herms International Socit vs. BII Railway Transportation
Performance |
| Timeline |
| Herms International Socit |
| BII Railway Transpor |
Hermès International and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermès International and BII Railway
The main advantage of trading using opposite Hermès International and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermès International position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Hermès International vs. LVMH Mot Hennessy | Hermès International vs. LVMH Mot Hennessy | Hermès International vs. LVMH Mot Hennessy | Hermès International vs. CHRISTIAN DIOR ADR14EO2 |
| BII Railway vs. CORNISH METALS INC | BII Railway vs. MCEWEN MINING INC | BII Railway vs. MAGNUM MINING EXP | BII Railway vs. GRIFFIN MINING LTD |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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