Correlation Between Nsx and BSP Financial
Can any of the company-specific risk be diversified away by investing in both Nsx 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 Nsx and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nsx and BSP Financial Group, you can compare the effects of market volatilities on Nsx 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 Nsx with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nsx and BSP Financial.
Diversification Opportunities for Nsx and BSP Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nsx and BSP is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nsx 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 Nsx 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 Nsx 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 Nsx i.e., Nsx and BSP Financial go up and down completely randomly.
Pair Corralation between Nsx and BSP Financial
Assuming the 90 days trading horizon Nsx is expected to generate 3.05 times more return on investment than BSP Financial. However, Nsx is 3.05 times more volatile than BSP Financial Group. It trades about 0.02 of its potential returns per unit of risk. BSP Financial Group is currently generating about 0.06 per unit of risk. If you would invest 3.16 in Nsx on September 4, 2024 and sell it today you would lose (0.26) from holding Nsx or give up 8.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nsx vs. BSP Financial Group
Performance |
| Timeline |
| Nsx |
| BSP Financial Group |
Nsx and BSP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nsx and BSP Financial
The main advantage of trading using opposite Nsx and BSP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nsx 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.The idea behind Nsx and BSP Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BSP Financial vs. Aneka Tambang Tbk | BSP Financial vs. Unibail Rodamco Westfield SE | BSP Financial vs. Macquarie Group | BSP Financial vs. Commonwealth Bank |
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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