Correlation Between BTS Group and BCPG Public

Can any of the company-specific risk be diversified away by investing in both BTS Group and BCPG Public 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 BTS Group and BCPG Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BTS Group Holdings and BCPG Public, you can compare the effects of market volatilities on BTS Group and BCPG Public 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 BTS Group with a short position of BCPG Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTS Group and BCPG Public.

Diversification Opportunities for BTS Group and BCPG Public

-0.74

Correlation Coefficient

BTS Group  BCPG Public

Pay attention - limited upside

The 3 months correlation between BTS and BCPG is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group Holdings and BCPG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCPG Public and BTS Group 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 BTS Group Holdings are associated (or correlated) with BCPG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCPG Public has no effect on the direction of BTS Group i.e., BTS Group and BCPG Public go up and down completely randomly.

Pair Corralation between BTS Group and BCPG Public

Assuming the 90 days trading horizon BTS Group Holdings is expected to generate 0.77 times more return on investment than BCPG Public. However, BTS Group Holdings is 1.3 times less risky than BCPG Public. It trades about 0.21 of its potential returns per unit of risk. BCPG Public is currently generating about -0.18 per unit of risk. If you would invest  476.00  in BTS Group Holdings on September 16, 2024 and sell it today you would earn a total of  114.00  from holding BTS Group Holdings or generate 23.95% return on investment over 90 days.

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

BTS Group Holdings  vs.  BCPG Public

BTS Group Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, BTS Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

BCPG Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCPG Public 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 forward-looking signals 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.

Pair Trading with BTS Group and BCPG Public

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

The idea behind BTS Group Holdings and BCPG 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.