Correlation Between BEKA LUX and SISF BRIC

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

By analyzing existing cross correlation between BEKA LUX SICAV and SISF BRIC AC, you can compare the effects of market volatilities on BEKA LUX and SISF BRIC 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 BEKA LUX with a short position of SISF BRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEKA LUX and SISF BRIC.

Diversification Opportunities for BEKA LUX and SISF BRIC

0.13

Correlation Coefficient

BEKA LUX  SISF BRIC

Average diversification

The 3 months correlation between BEKA and SISF is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding BEKA LUX SICAV and SISF BRIC AC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SISF BRIC AC and BEKA LUX 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 BEKA LUX SICAV are associated (or correlated) with SISF BRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SISF BRIC AC has no effect on the direction of BEKA LUX i.e., BEKA LUX and SISF BRIC go up and down completely randomly.

Pair Corralation between BEKA LUX and SISF BRIC

Assuming the 90 days trading horizon BEKA LUX SICAV is expected to generate 0.13 times more return on investment than SISF BRIC. However, BEKA LUX SICAV is 7.41 times less risky than SISF BRIC. It trades about -0.4 of its potential returns per unit of risk. SISF BRIC AC is currently generating about -0.05 per unit of risk. If you would invest  8,800  in BEKA LUX SICAV on October 4, 2024 and sell it today you would lose (108.00) from holding BEKA LUX SICAV or give up 1.23% of portfolio value over 90 days.

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

BEKA LUX SICAV  vs.  SISF BRIC AC

BEKA LUX SICAV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEKA LUX SICAV has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, BEKA LUX is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

SISF BRIC AC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SISF BRIC AC has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, SISF BRIC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BEKA LUX and SISF BRIC

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

The idea behind BEKA LUX SICAV and SISF BRIC AC 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.