Correlation Between CB Industrial and British American
Can any of the company-specific risk be diversified away by investing in both CB Industrial and British American 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 CB Industrial and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CB Industrial Product and British American Tobacco, you can compare the effects of market volatilities on CB Industrial and British American 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 CB Industrial with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of CB Industrial and British American.
Diversification Opportunities for CB Industrial and British American
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 7076 and British is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CB Industrial Product and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and CB Industrial 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 CB Industrial Product are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of CB Industrial i.e., CB Industrial and British American go up and down completely randomly.
Pair Corralation between CB Industrial and British American
Assuming the 90 days trading horizon CB Industrial Product is expected to generate 0.8 times more return on investment than British American. However, CB Industrial Product is 1.24 times less risky than British American. It trades about 0.01 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.0 per unit of risk. If you would invest 136.00 in CB Industrial Product on September 14, 2024 and sell it today you would earn a total of 0.00 from holding CB Industrial Product or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.41% |
Values | Daily Returns |
CB Industrial Product vs. British American Tobacco
Performance |
Timeline |
CB Industrial Product |
British American Tobacco |
CB Industrial and British American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CB Industrial and British American
The main advantage of trading using opposite CB Industrial and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CB Industrial position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.CB Industrial vs. PIE Industrial Bhd | CB Industrial vs. Kobay Tech Bhd | CB Industrial vs. JF Technology BHD | CB Industrial vs. MyTech Group Bhd |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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