Correlation Between Becton Dickinson and Top Glove

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

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

Diversification Opportunities for Becton Dickinson and Top Glove

-0.51

Correlation Coefficient

Becton Dickinson  Top Glove

Excellent diversification

The 3 months correlation between Becton and Top is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Top Glove in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Glove and Becton Dickinson 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 Becton Dickinson and are associated (or correlated) with Top Glove. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Glove has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Top Glove go up and down completely randomly.

Pair Corralation between Becton Dickinson and Top Glove

Considering the 90-day investment horizon Becton Dickinson is expected to generate 14.93 times less return on investment than Top Glove. But when comparing it to its historical volatility, Becton Dickinson and is 8.27 times less risky than Top Glove. It trades about 0.08 of its potential returns per unit of risk. Top Glove is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Top Glove on September 27, 2024 and sell it today you would earn a total of  6.00  from holding Top Glove or generate 24.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Becton Dickinson and  vs.  Top Glove

Becton Dickinson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Becton Dickinson and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Becton Dickinson is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Top Glove

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Top Glove are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Top Glove reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Becton Dickinson and Top Glove

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

The idea behind Becton Dickinson and and Top Glove 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.