Correlation Between BC IRON and Coheris SA

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

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

Diversification Opportunities for BC IRON and Coheris SA

-0.74

Correlation Coefficient

BC IRON  Coheris SA

Pay attention - limited upside

The 3 months correlation between BC3 and Coheris is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON and Coheris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coheris SA and BC IRON 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 BC IRON are associated (or correlated) with Coheris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coheris SA has no effect on the direction of BC IRON i.e., BC IRON and Coheris SA go up and down completely randomly.

Pair Corralation between BC IRON and Coheris SA

Assuming the 90 days trading horizon BC IRON is expected to under-perform the Coheris SA. In addition to that, BC IRON is 1.13 times more volatile than Coheris SA. It trades about -0.05 of its total potential returns per unit of risk. Coheris SA is currently generating about 0.13 per unit of volatility. If you would invest  708.00  in Coheris SA on October 10, 2024 and sell it today you would earn a total of  152.00  from holding Coheris SA or generate 21.47% return on investment over 90 days.

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

BC IRON  vs.  Coheris SA

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BC IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Coheris SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coheris SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Coheris SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BC IRON and Coheris SA

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

The idea behind BC IRON and Coheris 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.