Correlation Between Young Cos and BH Macro
Can any of the company-specific risk be diversified away by investing in both Young Cos and BH Macro 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 Young Cos and BH Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and BH Macro Limited, you can compare the effects of market volatilities on Young Cos and BH Macro 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 Young Cos with a short position of BH Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and BH Macro.
Diversification Opportunities for Young Cos and BH Macro
Very weak diversification
The 3 months correlation between Young and BHMU is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro Limited and Young Cos 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 Young Cos Brewery are associated (or correlated) with BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of Young Cos i.e., Young Cos and BH Macro go up and down completely randomly.
Pair Corralation between Young Cos and BH Macro
Assuming the 90 days trading horizon Young Cos Brewery is expected to generate 1.47 times more return on investment than BH Macro. However, Young Cos is 1.47 times more volatile than BH Macro Limited. It trades about 0.02 of its potential returns per unit of risk. BH Macro Limited is currently generating about -0.01 per unit of risk. If you would invest 59,260 in Young Cos Brewery on September 4, 2024 and sell it today you would earn a total of 4,940 from holding Young Cos Brewery or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Cos Brewery vs. BH Macro Limited
Performance |
| Timeline |
| Young Cos Brewery |
| BH Macro Limited |
Young Cos and BH Macro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and BH Macro
The main advantage of trading using opposite Young Cos and BH Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos position performs unexpectedly, BH Macro 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 BH Macro will offset losses from the drop in BH Macro's long position.| Young Cos vs. Liontrust Asset Management | Young Cos vs. Hollywood Bowl Group | Young Cos vs. PureTech Health plc | Young Cos vs. SMA Solar Technology |
| BH Macro vs. SupplyMe Capital PLC | BH Macro vs. Lloyds Banking Group | BH Macro vs. Premier African Minerals | BH Macro vs. SANTANDER UK 8 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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