Correlation Between Export Inv and Bram Indus

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

By analyzing existing cross correlation between Export Inv and Bram Indus, you can compare the effects of market volatilities on Export Inv and Bram Indus 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 Export Inv with a short position of Bram Indus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Export Inv and Bram Indus.

Diversification Opportunities for Export Inv and Bram Indus

0.78

Correlation Coefficient

Export Inv  Bram Indus

Poor diversification

The 3 months correlation between Export and Bram is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Export Inv and Bram Indus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bram Indus and Export Inv 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 Export Inv are associated (or correlated) with Bram Indus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bram Indus has no effect on the direction of Export Inv i.e., Export Inv and Bram Indus go up and down completely randomly.

Pair Corralation between Export Inv and Bram Indus

Assuming the 90 days trading horizon Export Inv is expected to generate 0.94 times more return on investment than Bram Indus. However, Export Inv is 1.06 times less risky than Bram Indus. It trades about 0.21 of its potential returns per unit of risk. Bram Indus is currently generating about 0.09 per unit of risk. If you would invest  491,100  in Export Inv on September 25, 2024 and sell it today you would earn a total of  182,100  from holding Export Inv or generate 37.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.83%
Values	Daily Returns

Export Inv  vs.  Bram Indus

Export Inv

Risk-Adjusted Performance

16 of 100

Solid

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

Bram Indus

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bram Indus are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bram Indus sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Export Inv and Bram Indus

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

The idea behind Export Inv and Bram Indus 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.