Correlation Between BP Plastics and Padini Holdings

Can any of the company-specific risk be diversified away by investing in both BP Plastics and Padini Holdings 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 BP Plastics and Padini Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BP Plastics Holding and Padini Holdings Bhd, you can compare the effects of market volatilities on BP Plastics and Padini Holdings 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 BP Plastics with a short position of Padini Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plastics and Padini Holdings.

Diversification Opportunities for BP Plastics and Padini Holdings

0.21

Correlation Coefficient

BP Plastics  Padini Holdings

Modest diversification

The 3 months correlation between 5100 and Padini is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BP Plastics Holding and Padini Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Padini Holdings Bhd and BP Plastics 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 BP Plastics Holding are associated (or correlated) with Padini Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Padini Holdings Bhd has no effect on the direction of BP Plastics i.e., BP Plastics and Padini Holdings go up and down completely randomly.

Pair Corralation between BP Plastics and Padini Holdings

Assuming the 90 days trading horizon BP Plastics Holding is expected to under-perform the Padini Holdings. In addition to that, BP Plastics is 1.11 times more volatile than Padini Holdings Bhd. It trades about -0.07 of its total potential returns per unit of risk. Padini Holdings Bhd is currently generating about 0.01 per unit of volatility. If you would invest  328.00  in Padini Holdings Bhd on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Padini Holdings Bhd or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

BP Plastics Holding  vs.  Padini Holdings Bhd

BP Plastics Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP Plastics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, BP Plastics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Padini Holdings Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Padini Holdings Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Padini Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BP Plastics and Padini Holdings

The main advantage of trading using opposite BP Plastics and Padini Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plastics position performs unexpectedly, Padini Holdings 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 Padini Holdings will offset losses from the drop in Padini Holdings' long position.

The idea behind BP Plastics Holding and Padini Holdings Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.