Correlation Between Indo Global and BZAM
Can any of the company-specific risk be diversified away by investing in both Indo Global and BZAM 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 Indo Global and BZAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indo Global Exchange and BZAM, you can compare the effects of market volatilities on Indo Global and BZAM 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 Indo Global with a short position of BZAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Global and BZAM.
Diversification Opportunities for Indo Global and BZAM
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indo and BZAM is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Indo Global Exchange and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM and Indo Global 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 Indo Global Exchange are associated (or correlated) with BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Indo Global i.e., Indo Global and BZAM go up and down completely randomly.
Pair Corralation between Indo Global and BZAM
Given the investment horizon of 90 days Indo Global is expected to generate 19.02 times less return on investment than BZAM. But when comparing it to its historical volatility, Indo Global Exchange is 6.22 times less risky than BZAM. It trades about 0.02 of its potential returns per unit of risk. BZAM is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 41.00 in BZAM on August 30, 2024 and sell it today you would lose (41.00) from holding BZAM or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Indo Global Exchange vs. BZAM
Performance |
| Timeline |
| Indo Global Exchange |
| BZAM |
Indo Global and BZAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Global and BZAM
The main advantage of trading using opposite Indo Global and BZAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Global position performs unexpectedly, BZAM 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 BZAM will offset losses from the drop in BZAM's long position.| Indo Global vs. Cann American Corp | Indo Global vs. GelStat Corp | Indo Global vs. Green Cures Botanical | Indo Global vs. For The Earth |
| BZAM vs. Southwest Gas Holdings | BZAM vs. WEC Energy Group | BZAM vs. Topbuild Corp | BZAM vs. CenterPoint Energy |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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