Correlation Between Transport and Ba Ria

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

By analyzing existing cross correlation between Transport and Industry and Ba Ria Thermal, you can compare the effects of market volatilities on Transport and Ba Ria 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 Transport with a short position of Ba Ria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport and Ba Ria.

Diversification Opportunities for Transport and Ba Ria

0.74

Correlation Coefficient

Transport  Ba Ria

Poor diversification

The 3 months correlation between Transport and BTP is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Transport and Industry and Ba Ria Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ba Ria Thermal and Transport 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 Transport and Industry are associated (or correlated) with Ba Ria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ba Ria Thermal has no effect on the direction of Transport i.e., Transport and Ba Ria go up and down completely randomly.

Pair Corralation between Transport and Ba Ria

Assuming the 90 days trading horizon Transport and Industry is expected to under-perform the Ba Ria. In addition to that, Transport is 2.26 times more volatile than Ba Ria Thermal. It trades about -0.2 of its total potential returns per unit of risk. Ba Ria Thermal is currently generating about -0.19 per unit of volatility. If you would invest  1,290,000  in Ba Ria Thermal on September 15, 2024 and sell it today you would lose (125,000) from holding Ba Ria Thermal or give up 9.69% of portfolio value over 90 days.

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

Transport and Industry  vs.  Ba Ria Thermal

Transport and Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transport and Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ba Ria Thermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ba Ria Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Transport and Ba Ria

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

The idea behind Transport and Industry and Ba Ria Thermal 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.