Correlation Between BCE and Baylin Technologies

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

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

Diversification Opportunities for BCE and Baylin Technologies

-0.81

Correlation Coefficient

BCE  Baylin Technologies

Pay attention - limited upside

The 3 months correlation between BCE and Baylin is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and BCE 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 BCE Inc are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of BCE i.e., BCE and Baylin Technologies go up and down completely randomly.

Pair Corralation between BCE and Baylin Technologies

Assuming the 90 days horizon BCE Inc is expected to generate 0.1 times more return on investment than Baylin Technologies. However, BCE Inc is 10.35 times less risky than Baylin Technologies. It trades about 0.13 of its potential returns per unit of risk. Baylin Technologies is currently generating about -0.22 per unit of risk. If you would invest  1,069  in BCE Inc on December 28, 2024 and sell it today you would earn a total of  31.00  from holding BCE Inc or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

BCE Inc  vs.  Baylin Technologies

BCE Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BCE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Baylin Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baylin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BCE and Baylin Technologies

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

The idea behind BCE Inc and Baylin Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.