Correlation Between SPCG Public and BTS Group

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

By analyzing existing cross correlation between SPCG Public and BTS Group Holdings, you can compare the effects of market volatilities on SPCG Public and BTS Group 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 SPCG Public with a short position of BTS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPCG Public and BTS Group.

Diversification Opportunities for SPCG Public and BTS Group

-0.71

Correlation Coefficient

SPCG Public  BTS Group

Pay attention - limited upside

The 3 months correlation between SPCG and BTS is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SPCG Public and BTS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group Holdings and SPCG Public 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 SPCG Public are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group Holdings has no effect on the direction of SPCG Public i.e., SPCG Public and BTS Group go up and down completely randomly.

Pair Corralation between SPCG Public and BTS Group

Assuming the 90 days trading horizon SPCG Public is expected to under-perform the BTS Group. But the stock apears to be less risky and, when comparing its historical volatility, SPCG Public is 1.88 times less risky than BTS Group. The stock trades about -0.1 of its potential returns per unit of risk. The BTS Group Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  530.00  in BTS Group Holdings on September 27, 2024 and sell it today you would earn a total of  35.00  from holding BTS Group Holdings or generate 6.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

SPCG Public  vs.  BTS Group Holdings

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.

BTS Group Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group Holdings are ranked lower than 16 (%) 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.

Pair Trading with SPCG Public and BTS Group

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

The idea behind SPCG Public and BTS Group Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.