Correlation Between Medical Developments and BSP Financial
Can any of the company-specific risk be diversified away by investing in both Medical Developments 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 Medical Developments and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Developments International and BSP Financial Group, you can compare the effects of market volatilities on Medical Developments 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 Medical Developments with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Developments and BSP Financial.
Diversification Opportunities for Medical Developments and BSP Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medical and BSP is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Medical Developments Internati 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 Medical Developments 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 Medical Developments International 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 Medical Developments i.e., Medical Developments and BSP Financial go up and down completely randomly.
Pair Corralation between Medical Developments and BSP Financial
Assuming the 90 days trading horizon Medical Developments International is expected to under-perform the BSP Financial. In addition to that, Medical Developments is 1.03 times more volatile than BSP Financial Group. It trades about -0.31 of its total potential returns per unit of risk. BSP Financial Group is currently generating about 0.18 per unit of volatility. If you would invest 630.00 in BSP Financial Group on August 31, 2024 and sell it today you would earn a total of 46.00 from holding BSP Financial Group or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Developments Internati vs. BSP Financial Group
Performance |
| Timeline |
| Medical Developments |
| BSP Financial Group |
Medical Developments and BSP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Developments and BSP Financial
The main advantage of trading using opposite Medical Developments and BSP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Developments 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.| Medical Developments vs. Aneka Tambang Tbk | Medical Developments vs. Woolworths | Medical Developments vs. Commonwealth Bank | Medical Developments vs. BHP Group Limited |
| BSP Financial vs. K2 Asset Management | BSP Financial vs. Mount Gibson Iron | BSP Financial vs. Bluescope Steel | BSP Financial vs. Hawsons 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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