Correlation Between M3 Mining and BSP Financial
Can any of the company-specific risk be diversified away by investing in both M3 Mining and BSP Financial 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 M3 Mining and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and BSP Financial Group, you can compare the effects of market volatilities on M3 Mining and BSP Financial 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 M3 Mining with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and BSP Financial.
Diversification Opportunities for M3 Mining and BSP Financial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between M3M and BSP is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and BSP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSP Financial Group and M3 Mining 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 M3 Mining are associated (or correlated) with BSP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSP Financial Group has no effect on the direction of M3 Mining i.e., M3 Mining and BSP Financial go up and down completely randomly.
Pair Corralation between M3 Mining and BSP Financial
Assuming the 90 days trading horizon M3 Mining is expected to under-perform the BSP Financial. In addition to that, M3 Mining is 2.08 times more volatile than BSP Financial Group. It trades about -0.03 of its total potential returns per unit of risk. BSP Financial Group is currently generating about 0.09 per unit of volatility. If you would invest 619.00 in BSP Financial Group on September 1, 2024 and sell it today you would earn a total of 23.00 from holding BSP Financial Group or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M3 Mining vs. BSP Financial Group
Performance |
| Timeline |
| M3 Mining |
| BSP Financial Group |
M3 Mining and BSP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and BSP Financial
The main advantage of trading using opposite M3 Mining and BSP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining position performs unexpectedly, BSP Financial 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 BSP Financial will offset losses from the drop in BSP Financial's long position.| M3 Mining vs. IDP Education | M3 Mining vs. Sky Metals | M3 Mining vs. G8 Education | M3 Mining vs. RLF AgTech |
| BSP Financial vs. Renascor Resources | BSP Financial vs. Havilah Resources | BSP Financial vs. Boss Energy Limited | BSP Financial vs. Red Hill Iron |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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