Correlation Between Beeks Trading and Bloomsbury Publishing

Can any of the company-specific risk be diversified away by investing in both Beeks Trading and Bloomsbury Publishing 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 Beeks Trading and Bloomsbury Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beeks Trading and Bloomsbury Publishing Plc, you can compare the effects of market volatilities on Beeks Trading and Bloomsbury Publishing 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 Beeks Trading with a short position of Bloomsbury Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beeks Trading and Bloomsbury Publishing.

Diversification Opportunities for Beeks Trading and Bloomsbury Publishing

-0.1

Correlation Coefficient

Beeks Trading  Bloomsbury Publishing

Good diversification

The 3 months correlation between Beeks and Bloomsbury is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Beeks Trading and Bloomsbury Publishing Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomsbury Publishing Plc and Beeks Trading 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 Beeks Trading are associated (or correlated) with Bloomsbury Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomsbury Publishing Plc has no effect on the direction of Beeks Trading i.e., Beeks Trading and Bloomsbury Publishing go up and down completely randomly.

Pair Corralation between Beeks Trading and Bloomsbury Publishing

Assuming the 90 days trading horizon Beeks Trading is expected to generate 1.51 times more return on investment than Bloomsbury Publishing. However, Beeks Trading is 1.51 times more volatile than Bloomsbury Publishing Plc. It trades about 0.1 of its potential returns per unit of risk. Bloomsbury Publishing Plc is currently generating about 0.02 per unit of risk. If you would invest  23,400  in Beeks Trading on September 25, 2024 and sell it today you would earn a total of  4,200  from holding Beeks Trading or generate 17.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Beeks Trading  vs.  Bloomsbury Publishing Plc

Beeks Trading

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beeks Trading are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Beeks Trading exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bloomsbury Publishing Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomsbury Publishing Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bloomsbury Publishing is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Beeks Trading and Bloomsbury Publishing

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

The idea behind Beeks Trading and Bloomsbury Publishing Plc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.