Correlation Between BTS Group and SPCG Public

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

Diversification Opportunities for BTS Group and SPCG Public

-0.69

Correlation Coefficient

BTS Group  SPCG Public

Excellent diversification

The 3 months correlation between BTS and SPCG is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group Holdings and SPCG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPCG 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 SPCG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPCG Public has no effect on the direction of BTS Group i.e., BTS Group and SPCG Public go up and down completely randomly.

Pair Corralation between BTS Group and SPCG Public

Assuming the 90 days trading horizon BTS Group Holdings is expected to generate 1.5 times more return on investment than SPCG Public. However, BTS Group is 1.5 times more volatile than SPCG Public. It trades about 0.22 of its potential returns per unit of risk. SPCG 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	Weak
Accuracy	100.0%
Values	Daily Returns

BTS Group Holdings  vs.  SPCG 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.

SPCG Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPCG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with BTS Group and SPCG Public

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

The idea behind BTS Group Holdings and SPCG 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.