Correlation Between BPS TECHNOLOGY and Dexon Technology

Can any of the company-specific risk be diversified away by investing in both BPS TECHNOLOGY and Dexon Technology 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 BPS TECHNOLOGY and Dexon Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BPS TECHNOLOGY PUBLIC and Dexon Technology PCL, you can compare the effects of market volatilities on BPS TECHNOLOGY and Dexon Technology 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 BPS TECHNOLOGY with a short position of Dexon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPS TECHNOLOGY and Dexon Technology.

Diversification Opportunities for BPS TECHNOLOGY and Dexon Technology

0.84

Correlation Coefficient

BPS TECHNOLOGY  Dexon Technology

Very poor diversification

The 3 months correlation between BPS and Dexon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BPS TECHNOLOGY PUBLIC and Dexon Technology PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexon Technology PCL and BPS TECHNOLOGY 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 BPS TECHNOLOGY PUBLIC are associated (or correlated) with Dexon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexon Technology PCL has no effect on the direction of BPS TECHNOLOGY i.e., BPS TECHNOLOGY and Dexon Technology go up and down completely randomly.

Pair Corralation between BPS TECHNOLOGY and Dexon Technology

Assuming the 90 days trading horizon BPS TECHNOLOGY PUBLIC is expected to under-perform the Dexon Technology. In addition to that, BPS TECHNOLOGY is 2.24 times more volatile than Dexon Technology PCL. It trades about -0.09 of its total potential returns per unit of risk. Dexon Technology PCL is currently generating about -0.12 per unit of volatility. If you would invest  174.00  in Dexon Technology PCL on September 14, 2024 and sell it today you would lose (22.00) from holding Dexon Technology PCL or give up 12.64% of portfolio value over 90 days.

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

BPS TECHNOLOGY PUBLIC  vs.  Dexon Technology PCL

BPS TECHNOLOGY PUBLIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BPS TECHNOLOGY PUBLIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dexon Technology PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dexon Technology PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BPS TECHNOLOGY and Dexon Technology

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

The idea behind BPS TECHNOLOGY PUBLIC and Dexon Technology PCL 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.