Correlation Between THORNEY TECHS and BP Plc
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and BP Plc 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 THORNEY TECHS and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and BP plc, you can compare the effects of market volatilities on THORNEY TECHS and BP Plc 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 THORNEY TECHS with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and BP Plc.
Diversification Opportunities for THORNEY TECHS and BP Plc
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THORNEY and BSU is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and BP Plc go up and down completely randomly.
Pair Corralation between THORNEY TECHS and BP Plc
Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 3.47 times more return on investment than BP Plc. However, THORNEY TECHS is 3.47 times more volatile than BP plc. It trades about 0.02 of its potential returns per unit of risk. BP plc is currently generating about -0.01 per unit of risk. If you would invest 8.55 in THORNEY TECHS LTD on September 14, 2024 and sell it today you would lose (0.95) from holding THORNEY TECHS LTD or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. BP plc
Performance |
| Timeline |
| THORNEY TECHS LTD |
| BP plc |
THORNEY TECHS and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and BP Plc
The main advantage of trading using opposite THORNEY TECHS and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
| BP Plc vs. THORNEY TECHS LTD | BP Plc vs. Axcelis Technologies | BP Plc vs. FARO Technologies | BP Plc vs. GLG LIFE TECH |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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