Correlation Between BSP Financial and Embark Education

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

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

Diversification Opportunities for BSP Financial and Embark Education

0.46

Correlation Coefficient

BSP Financial  Embark Education

Very weak diversification

The 3 months correlation between BSP and Embark is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Embark Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Education and BSP Financial 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 BSP Financial Group are associated (or correlated) with Embark Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Education has no effect on the direction of BSP Financial i.e., BSP Financial and Embark Education go up and down completely randomly.

Pair Corralation between BSP Financial and Embark Education

Assuming the 90 days trading horizon BSP Financial Group is expected to generate 1.42 times more return on investment than Embark Education. However, BSP Financial is 1.42 times more volatile than Embark Education Group. It trades about 0.16 of its potential returns per unit of risk. Embark Education Group is currently generating about -0.14 per unit of risk. If you would invest  617.00  in BSP Financial Group on September 16, 2024 and sell it today you would earn a total of  37.00  from holding BSP Financial Group or generate 6.0% return on investment over 90 days.

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

BSP Financial Group  vs.  Embark Education Group

BSP Financial Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BSP Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, BSP Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Embark Education

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embark Education Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Embark Education may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BSP Financial and Embark Education

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

The idea behind BSP Financial Group and Embark Education Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.