Correlation Between LOral SA and BII Railway
Can any of the company-specific risk be diversified away by investing in both LOral SA 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 LOral SA and BII Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOral SA and BII Railway Transportation, you can compare the effects of market volatilities on LOral SA 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 LOral SA with a short position of BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOral SA and BII Railway.
Diversification Opportunities for LOral SA and BII Railway
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LOral and BII is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LOral SA 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 LOral SA 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 LOral SA 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 LOral SA i.e., LOral SA and BII Railway go up and down completely randomly.
Pair Corralation between LOral SA and BII Railway
Assuming the 90 days trading horizon LOral SA is expected to generate 0.66 times more return on investment than BII Railway. However, LOral SA is 1.52 times less risky than BII Railway. It trades about 0.21 of its potential returns per unit of risk. BII Railway Transportation is currently generating about -0.09 per unit of risk. If you would invest 32,685 in LOral SA on September 14, 2024 and sell it today you would earn a total of 1,770 from holding LOral SA or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOral SA vs. BII Railway Transportation
Performance |
| Timeline |
| LOral SA |
| BII Railway Transpor |
LOral SA and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOral SA and BII Railway
The main advantage of trading using opposite LOral SA and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOral SA 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.| LOral SA vs. BJs Restaurants | LOral SA vs. GREENX METALS LTD | LOral SA vs. GRIFFIN MINING LTD | LOral SA vs. Zijin Mining Group |
| BII Railway vs. Cognizant Technology Solutions | BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS AB | BII Railway vs. Norsk Hydro ASA |
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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