Correlation Between BC Bud and Procyon

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

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

Diversification Opportunities for BC Bud and Procyon

0.11

Correlation Coefficient

BC Bud  Procyon

Average diversification

The 3 months correlation between BCBCF and Procyon is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding The BC Bud and Procyon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procyon and BC Bud 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 The BC Bud are associated (or correlated) with Procyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procyon has no effect on the direction of BC Bud i.e., BC Bud and Procyon go up and down completely randomly.

Pair Corralation between BC Bud and Procyon

Assuming the 90 days horizon The BC Bud is expected to generate 1.81 times more return on investment than Procyon. However, BC Bud is 1.81 times more volatile than Procyon. It trades about 0.03 of its potential returns per unit of risk. Procyon is currently generating about -0.01 per unit of risk. If you would invest  6.90  in The BC Bud on October 7, 2024 and sell it today you would lose (0.23) from holding The BC Bud or give up 3.33% of portfolio value over 90 days.

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

The BC Bud  vs.  Procyon

BC Bud

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The BC Bud are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, BC Bud reported solid returns over the last few months and may actually be approaching a breakup point.

Procyon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procyon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BC Bud and Procyon

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

The idea behind The BC Bud and Procyon 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.