Correlation Between Armada Hflr and BCAP MSCI

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

By analyzing existing cross correlation between Armada Hflr Pr and BCAP MSCI Thailand, you can compare the effects of market volatilities on Armada Hflr and BCAP MSCI 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 Armada Hflr with a short position of BCAP MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and BCAP MSCI.

Diversification Opportunities for Armada Hflr and BCAP MSCI

0.9

Correlation Coefficient

Armada Hflr  BCAP MSCI

Almost no diversification

The 3 months correlation between Armada and BCAP is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and BCAP MSCI Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCAP MSCI Thailand and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with BCAP MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCAP MSCI Thailand has no effect on the direction of Armada Hflr i.e., Armada Hflr and BCAP MSCI go up and down completely randomly.

Pair Corralation between Armada Hflr and BCAP MSCI

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 1.52 times more return on investment than BCAP MSCI. However, Armada Hflr is 1.52 times more volatile than BCAP MSCI Thailand. It trades about -0.13 of its potential returns per unit of risk. BCAP MSCI Thailand is currently generating about -0.32 per unit of risk. If you would invest  970.00  in Armada Hflr Pr on December 11, 2024 and sell it today you would lose (80.00) from holding Armada Hflr Pr or give up 8.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.56%
Values	Daily Returns

Armada Hflr Pr  vs.  BCAP MSCI Thailand

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

BCAP MSCI Thailand

Risk-Adjusted Performance

Very Weak

Over the last 90 days BCAP MSCI Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pair Trading with Armada Hflr and BCAP MSCI

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

The idea behind Armada Hflr Pr and BCAP MSCI Thailand 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.