Correlation Between Beco Steel and Packages

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

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

Diversification Opportunities for Beco Steel and Packages

0.16

Correlation Coefficient

Beco Steel  Packages

Average diversification

The 3 months correlation between Beco and Packages is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Beco Steel and Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packages and Beco Steel 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 Beco Steel are associated (or correlated) with Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packages has no effect on the direction of Beco Steel i.e., Beco Steel and Packages go up and down completely randomly.

Pair Corralation between Beco Steel and Packages

Assuming the 90 days trading horizon Beco Steel is expected to generate 1.63 times more return on investment than Packages. However, Beco Steel is 1.63 times more volatile than Packages. It trades about 0.05 of its potential returns per unit of risk. Packages is currently generating about -0.01 per unit of risk. If you would invest  836.00  in Beco Steel on December 23, 2024 and sell it today you would earn a total of  68.00  from holding Beco Steel or generate 8.13% return on investment over 90 days.

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

Beco Steel  vs.  Packages

Beco Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beco Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beco Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Packages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Packages has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Packages is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Beco Steel and Packages

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

The idea behind Beco Steel and Packages 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.