Correlation Between BBB Foods and Brilliance China
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Brilliance China 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 BBB Foods and Brilliance China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Brilliance China Automotive, you can compare the effects of market volatilities on BBB Foods and Brilliance China 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 BBB Foods with a short position of Brilliance China. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Brilliance China.
Diversification Opportunities for BBB Foods and Brilliance China
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBB and Brilliance is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Brilliance China Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliance China Aut and BBB Foods 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 BBB Foods are associated (or correlated) with Brilliance China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliance China Aut has no effect on the direction of BBB Foods i.e., BBB Foods and Brilliance China go up and down completely randomly.
Pair Corralation between BBB Foods and Brilliance China
Given the investment horizon of 90 days BBB Foods is expected to generate 16.74 times less return on investment than Brilliance China. But when comparing it to its historical volatility, BBB Foods is 9.68 times less risky than Brilliance China. It trades about 0.09 of its potential returns per unit of risk. Brilliance China Automotive is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Brilliance China Automotive on August 31, 2024 and sell it today you would earn a total of 12.00 from holding Brilliance China Automotive or generate 54.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 36.1% |
| Values | Daily Returns |
BBB Foods vs. Brilliance China Automotive
Performance |
| Timeline |
| BBB Foods |
| Brilliance China Aut |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BBB Foods and Brilliance China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Brilliance China
The main advantage of trading using opposite BBB Foods and Brilliance China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Brilliance China 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 Brilliance China will offset losses from the drop in Brilliance China's long position.| BBB Foods vs. Citizens Bancorp Investment | BBB Foods vs. Stepstone Group | BBB Foods vs. Independence Realty Trust | BBB Foods vs. Western Sierra Mining |
| Brilliance China vs. Asure Software | Brilliance China vs. Reservoir Media | Brilliance China vs. Western Acquisition Ventures | Brilliance China vs. Sphere Entertainment Co |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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