Correlation Between Bip Investment and Electra Battery

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

By analyzing existing cross correlation between Bip Investment Corp and Electra Battery Materials, you can compare the effects of market volatilities on Bip Investment and Electra Battery 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 Bip Investment with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bip Investment and Electra Battery.

Diversification Opportunities for Bip Investment and Electra Battery

-0.11

Correlation Coefficient

Bip Investment  Electra Battery

Good diversification

The 3 months correlation between Bip and Electra is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bip Investment Corp and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery Materials and Bip Investment 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 Bip Investment Corp are associated (or correlated) with Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of Bip Investment i.e., Bip Investment and Electra Battery go up and down completely randomly.

Pair Corralation between Bip Investment and Electra Battery

If you would invest  62.00  in Electra Battery Materials on October 14, 2024 and sell it today you would earn a total of  180.00  from holding Electra Battery Materials or generate 290.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.63%
Values	Daily Returns

Bip Investment Corp  vs.  Electra Battery Materials

Bip Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bip Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Bip Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Electra Battery Materials

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electra Battery Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Electra Battery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bip Investment and Electra Battery

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

The idea behind Bip Investment Corp and Electra Battery Materials 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.