Correlation Between Renascor Resources and BSP Financial
Can any of the company-specific risk be diversified away by investing in both Renascor Resources 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 Renascor Resources and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renascor Resources and BSP Financial Group, you can compare the effects of market volatilities on Renascor Resources 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 Renascor Resources with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renascor Resources and BSP Financial.
Diversification Opportunities for Renascor Resources and BSP Financial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Renascor and BSP is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Renascor Resources 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 Renascor Resources 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 Renascor Resources 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 Renascor Resources i.e., Renascor Resources and BSP Financial go up and down completely randomly.
Pair Corralation between Renascor Resources and BSP Financial
Assuming the 90 days trading horizon Renascor Resources is expected to under-perform the BSP Financial. In addition to that, Renascor Resources is 1.05 times more volatile than BSP Financial Group. It trades about -0.15 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 Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Renascor Resources vs. BSP Financial Group
Performance |
| Timeline |
| Renascor Resources |
| BSP Financial Group |
Renascor Resources and BSP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renascor Resources and BSP Financial
The main advantage of trading using opposite Renascor Resources and BSP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renascor Resources 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.| Renascor Resources vs. Northern Star Resources | Renascor Resources vs. Evolution Mining | Renascor Resources vs. Bluescope Steel | Renascor Resources vs. Sandfire Resources NL |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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