Correlation Between BII Railway and KOOL2PLAY

Can any of the company-specific risk be diversified away by investing in both BII Railway and KOOL2PLAY 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 BII Railway and KOOL2PLAY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BII Railway Transportation and KOOL2PLAY SA ZY, you can compare the effects of market volatilities on BII Railway and KOOL2PLAY 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 BII Railway with a short position of KOOL2PLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and KOOL2PLAY.

Diversification Opportunities for BII Railway and KOOL2PLAY

0.33

Correlation Coefficient

BII Railway  KOOL2PLAY

Weak diversification

The 3 months correlation between BII and KOOL2PLAY is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and KOOL2PLAY SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOOL2PLAY SA ZY and BII Railway 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 BII Railway Transportation are associated (or correlated) with KOOL2PLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOOL2PLAY SA ZY has no effect on the direction of BII Railway i.e., BII Railway and KOOL2PLAY go up and down completely randomly.

Pair Corralation between BII Railway and KOOL2PLAY

Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the KOOL2PLAY. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 2.11 times less risky than KOOL2PLAY. The stock trades about -0.04 of its potential returns per unit of risk. The KOOL2PLAY SA ZY is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  17.00  in KOOL2PLAY SA ZY on September 13, 2024 and sell it today you would earn a total of  1.00  from holding KOOL2PLAY SA ZY or generate 5.88% return on investment over 90 days.

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

BII Railway Transportation  vs.  KOOL2PLAY SA ZY

BII Railway Transpor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BII Railway reported solid returns over the last few months and may actually be approaching a breakup point.

KOOL2PLAY SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KOOL2PLAY SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KOOL2PLAY is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BII Railway and KOOL2PLAY

The main advantage of trading using opposite BII Railway and KOOL2PLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, KOOL2PLAY 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 KOOL2PLAY will offset losses from the drop in KOOL2PLAY's long position.

The idea behind BII Railway Transportation and KOOL2PLAY SA ZY 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.