Correlation Between BA Airport and Business Online

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

By analyzing existing cross correlation between BA Airport Leasehold and Business Online PCL, you can compare the effects of market volatilities on BA Airport and Business Online 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 BA Airport with a short position of Business Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of BA Airport and Business Online.

Diversification Opportunities for BA Airport and Business Online

0.49

Correlation Coefficient

BA Airport  Business Online

Very weak diversification

The 3 months correlation between BAREIT and Business is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BA Airport Leasehold and Business Online PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business Online PCL and BA Airport 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 BA Airport Leasehold are associated (or correlated) with Business Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business Online PCL has no effect on the direction of BA Airport i.e., BA Airport and Business Online go up and down completely randomly.

Pair Corralation between BA Airport and Business Online

Assuming the 90 days trading horizon BA Airport Leasehold is expected to generate 0.31 times more return on investment than Business Online. However, BA Airport Leasehold is 3.27 times less risky than Business Online. It trades about 0.05 of its potential returns per unit of risk. Business Online PCL is currently generating about -0.01 per unit of risk. If you would invest  940.00  in BA Airport Leasehold on December 2, 2024 and sell it today you would earn a total of  20.00  from holding BA Airport Leasehold or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

BA Airport Leasehold  vs.  Business Online PCL

BA Airport Leasehold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BA Airport Leasehold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BA Airport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Business Online PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Business Online PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Business Online is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BA Airport and Business Online

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

The idea behind BA Airport Leasehold and Business Online PCL 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.