Correlation Between Broadpeak and Placoplatre

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

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

Diversification Opportunities for Broadpeak and Placoplatre

0.22

Correlation Coefficient

Broadpeak  Placoplatre

Modest diversification

The 3 months correlation between Broadpeak and Placoplatre is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Broadpeak SA and Placoplatre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Placoplatre SA and Broadpeak 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 Broadpeak SA are associated (or correlated) with Placoplatre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Placoplatre SA has no effect on the direction of Broadpeak i.e., Broadpeak and Placoplatre go up and down completely randomly.

Pair Corralation between Broadpeak and Placoplatre

Assuming the 90 days trading horizon Broadpeak SA is expected to under-perform the Placoplatre. In addition to that, Broadpeak is 1.21 times more volatile than Placoplatre SA. It trades about -0.1 of its total potential returns per unit of risk. Placoplatre SA is currently generating about -0.03 per unit of volatility. If you would invest  64,000  in Placoplatre SA on October 9, 2024 and sell it today you would lose (14,000) from holding Placoplatre SA or give up 21.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.07%
Values	Daily Returns

Broadpeak SA  vs.  Placoplatre SA

Broadpeak SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Placoplatre SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Placoplatre SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Placoplatre is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Broadpeak and Placoplatre

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

The idea behind Broadpeak SA and Placoplatre SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.