Correlation Between BPS TECHNOLOGY and Shangri La

Can any of the company-specific risk be diversified away by investing in both BPS TECHNOLOGY and Shangri La 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 Shangri La 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 Shangri La Hotel Public, you can compare the effects of market volatilities on BPS TECHNOLOGY and Shangri La 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 Shangri La. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPS TECHNOLOGY and Shangri La.

Diversification Opportunities for BPS TECHNOLOGY and Shangri La

-0.05

Correlation Coefficient

BPS TECHNOLOGY  Shangri La

Good diversification

The 3 months correlation between BPS and Shangri is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BPS TECHNOLOGY PUBLIC and Shangri La Hotel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotel 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 Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotel has no effect on the direction of BPS TECHNOLOGY i.e., BPS TECHNOLOGY and Shangri La go up and down completely randomly.

Pair Corralation between BPS TECHNOLOGY and Shangri La

Assuming the 90 days trading horizon BPS TECHNOLOGY PUBLIC is expected to under-perform the Shangri La. But the stock apears to be less risky and, when comparing its historical volatility, BPS TECHNOLOGY PUBLIC is 21.44 times less risky than Shangri La. The stock trades about -0.01 of its potential returns per unit of risk. The Shangri La Hotel Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,950  in Shangri La Hotel Public on September 13, 2024 and sell it today you would lose (100.00) from holding Shangri La Hotel Public or give up 2.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.3%
Values	Daily Returns

BPS TECHNOLOGY PUBLIC  vs.  Shangri La Hotel Public

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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Shangri La Hotel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shangri La Hotel Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Shangri La sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BPS TECHNOLOGY and Shangri La

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

The idea behind BPS TECHNOLOGY PUBLIC and Shangri La Hotel Public 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.