Correlation Between BGrimm Power and BCPG Public

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

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

Diversification Opportunities for BGrimm Power and BCPG Public

0.93

Correlation Coefficient

BGrimm Power  BCPG Public

Almost no diversification

The 3 months correlation between BGrimm and BCPG is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding BGrimm Power Public and BCPG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCPG Public and BGrimm Power 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 BGrimm Power Public are associated (or correlated) with BCPG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCPG Public has no effect on the direction of BGrimm Power i.e., BGrimm Power and BCPG Public go up and down completely randomly.

Pair Corralation between BGrimm Power and BCPG Public

Assuming the 90 days trading horizon BGrimm Power Public is expected to generate 0.72 times more return on investment than BCPG Public. However, BGrimm Power Public is 1.39 times less risky than BCPG Public. It trades about 0.02 of its potential returns per unit of risk. BCPG Public is currently generating about -0.05 per unit of risk. If you would invest  2,070  in BGrimm Power Public on September 3, 2024 and sell it today you would earn a total of  30.00  from holding BGrimm Power Public or generate 1.45% return on investment over 90 days.

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

BGrimm Power Public  vs.  BCPG Public

BGrimm Power Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BGrimm Power Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, BGrimm Power is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BCPG Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCPG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with BGrimm Power and BCPG Public

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

The idea behind BGrimm Power Public and BCPG Public 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.