Correlation Between BTS Group and Energy Absolute

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

Diversification Opportunities for BTS Group and Energy Absolute

-0.83

Correlation Coefficient

BTS Group  Energy Absolute

Pay attention - limited upside

The 3 months correlation between BTS and Energy is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group Holdings and Energy Absolute Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Absolute 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 Energy Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Absolute Public has no effect on the direction of BTS Group i.e., BTS Group and Energy Absolute go up and down completely randomly.

Pair Corralation between BTS Group and Energy Absolute

Assuming the 90 days trading horizon BTS Group Holdings is expected to generate 0.38 times more return on investment than Energy Absolute. However, BTS Group Holdings is 2.6 times less risky than Energy Absolute. It trades about 0.22 of its potential returns per unit of risk. Energy Absolute Public is currently generating about -0.12 per unit of risk. If you would invest  450.00  in BTS Group Holdings on September 26, 2024 and sell it today you would earn a total of  115.00  from holding BTS Group Holdings or generate 25.56% return on investment over 90 days.

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

BTS Group Holdings  vs.  Energy Absolute Public

BTS Group Holdings

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group Holdings are ranked lower than 17 (%) 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.

Energy Absolute Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Absolute 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 fundamental drivers 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 Energy Absolute

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

The idea behind BTS Group Holdings and Energy Absolute 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.

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 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.