Correlation Between Bayfirst Financial and Credicorp

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

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

Diversification Opportunities for Bayfirst Financial and Credicorp

0.36

Correlation Coefficient

Bayfirst Financial  Credicorp

Weak diversification

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

Pair Corralation between Bayfirst Financial and Credicorp

Given the investment horizon of 90 days Bayfirst Financial Corp is expected to generate 2.14 times more return on investment than Credicorp. However, Bayfirst Financial is 2.14 times more volatile than Credicorp. It trades about 0.18 of its potential returns per unit of risk. Credicorp is currently generating about 0.06 per unit of risk. If you would invest  1,343  in Bayfirst Financial Corp on December 30, 2024 and sell it today you would earn a total of  472.00  from holding Bayfirst Financial Corp or generate 35.15% return on investment over 90 days.

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

Bayfirst Financial Corp  vs.  Credicorp

Bayfirst Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bayfirst Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Bayfirst Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Credicorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Credicorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Credicorp 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 Bayfirst Financial and Credicorp

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

The idea behind Bayfirst Financial Corp and Credicorp 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.