Correlation Between Cleanaway Waste and BII Railway

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

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

Diversification Opportunities for Cleanaway Waste and BII Railway

0.36

Correlation Coefficient

Cleanaway Waste  BII Railway

Weak diversification

The 3 months correlation between Cleanaway and BII is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor and Cleanaway Waste 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 Cleanaway Waste Management are associated (or correlated) with BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Cleanaway Waste i.e., Cleanaway Waste and BII Railway go up and down completely randomly.

Pair Corralation between Cleanaway Waste and BII Railway

Assuming the 90 days trading horizon Cleanaway Waste Management is expected to under-perform the BII Railway. But the stock apears to be less risky and, when comparing its historical volatility, Cleanaway Waste Management is 1.67 times less risky than BII Railway. The stock trades about 0.0 of its potential returns per unit of risk. The BII Railway Transportation is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.40  in BII Railway Transportation on September 12, 2024 and sell it today you would earn a total of  0.25  from holding BII Railway Transportation or generate 10.42% return on investment over 90 days.

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

Cleanaway Waste Management  vs.  BII Railway Transportation

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cleanaway Waste is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Cleanaway Waste and BII Railway

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

The idea behind Cleanaway Waste Management and BII Railway Transportation 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.