Correlation Between SERI INDUSTRIAL and BII Railway
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL 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 SERI INDUSTRIAL and BII Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and BII Railway Transportation, you can compare the effects of market volatilities on SERI INDUSTRIAL 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 SERI INDUSTRIAL with a short position of BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and BII Railway.
Diversification Opportunities for SERI INDUSTRIAL and BII Railway
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SERI and BII is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 SERI INDUSTRIAL i.e., SERI INDUSTRIAL and BII Railway go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and BII Railway
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the BII Railway. In addition to that, SERI INDUSTRIAL is 1.19 times more volatile than BII Railway Transportation. It trades about -0.06 of its total potential returns per unit of risk. BII Railway Transportation is currently generating about 0.05 per unit of volatility. If you would invest 2.40 in BII Railway Transportation on September 12, 2024 and sell it today you would earn a total of 0.20 from holding BII Railway Transportation or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. BII Railway Transportation
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| BII Railway Transpor |
SERI INDUSTRIAL and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and BII Railway
The main advantage of trading using opposite SERI INDUSTRIAL and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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