Correlation Between Dexon Technology and BPS TECHNOLOGY

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

By analyzing existing cross correlation between Dexon Technology PCL and BPS TECHNOLOGY PUBLIC, you can compare the effects of market volatilities on Dexon Technology and BPS TECHNOLOGY 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 Dexon Technology with a short position of BPS TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexon Technology and BPS TECHNOLOGY.

Diversification Opportunities for Dexon Technology and BPS TECHNOLOGY

0.84

Correlation Coefficient

Dexon Technology  BPS TECHNOLOGY

Very poor diversification

The 3 months correlation between Dexon and BPS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dexon Technology PCL and BPS TECHNOLOGY PUBLIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPS TECHNOLOGY PUBLIC and Dexon 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 Dexon Technology PCL are associated (or correlated) with BPS TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPS TECHNOLOGY PUBLIC has no effect on the direction of Dexon Technology i.e., Dexon Technology and BPS TECHNOLOGY go up and down completely randomly.

Pair Corralation between Dexon Technology and BPS TECHNOLOGY

Assuming the 90 days trading horizon Dexon Technology PCL is expected to generate 0.45 times more return on investment than BPS TECHNOLOGY. However, Dexon Technology PCL is 2.24 times less risky than BPS TECHNOLOGY. It trades about -0.12 of its potential returns per unit of risk. BPS TECHNOLOGY PUBLIC is currently generating about -0.09 per unit of risk. If you would invest  174.00  in Dexon Technology PCL on September 14, 2024 and sell it today you would lose (22.00) from holding Dexon Technology PCL or give up 12.64% of portfolio value over 90 days.

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

Dexon Technology PCL  vs.  BPS TECHNOLOGY PUBLIC

Dexon Technology PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dexon Technology PCL 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 weak performance in the last few months, the Stock's basic indicators 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 Dexon Technology and BPS TECHNOLOGY

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

The idea behind Dexon Technology PCL and BPS TECHNOLOGY 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 Commodity Directory module to find actively traded commodities issued by global exchanges.