Correlation Between Advanced Braking and Bisalloy Steel

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

By analyzing existing cross correlation between Advanced Braking Technology and Bisalloy Steel Group, you can compare the effects of market volatilities on Advanced Braking and Bisalloy Steel 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 Advanced Braking with a short position of Bisalloy Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Bisalloy Steel.

Diversification Opportunities for Advanced Braking and Bisalloy Steel

0.66

Correlation Coefficient

Advanced Braking  Bisalloy Steel

Poor diversification

The 3 months correlation between Advanced and Bisalloy is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Bisalloy Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisalloy Steel Group and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Bisalloy Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisalloy Steel Group has no effect on the direction of Advanced Braking i.e., Advanced Braking and Bisalloy Steel go up and down completely randomly.

Pair Corralation between Advanced Braking and Bisalloy Steel

Assuming the 90 days trading horizon Advanced Braking Technology is expected to under-perform the Bisalloy Steel. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Braking Technology is 1.01 times less risky than Bisalloy Steel. The stock trades about -0.19 of its potential returns per unit of risk. The Bisalloy Steel Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  397.00  in Bisalloy Steel Group on September 22, 2024 and sell it today you would earn a total of  39.00  from holding Bisalloy Steel Group or generate 9.82% return on investment over 90 days.

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

Advanced Braking Technology  vs.  Bisalloy Steel Group

Advanced Braking Tec

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Braking Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Advanced Braking may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bisalloy Steel Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bisalloy Steel Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bisalloy Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Braking and Bisalloy Steel

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

The idea behind Advanced Braking Technology and Bisalloy Steel Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.