Correlation Between Bip Investment and Themac Resources

Can any of the company-specific risk be diversified away by investing in both Bip Investment and Themac Resources 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 Themac Resources 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 Themac Resources Group, you can compare the effects of market volatilities on Bip Investment and Themac Resources 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 Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bip Investment and Themac Resources.

Diversification Opportunities for Bip Investment and Themac Resources

-0.24

Correlation Coefficient

Bip Investment  Themac Resources

Very good diversification

The 3 months correlation between Bip and Themac is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bip Investment Corp and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Bip Investment i.e., Bip Investment and Themac Resources go up and down completely randomly.

Pair Corralation between Bip Investment and Themac Resources

Assuming the 90 days trading horizon Bip Investment is expected to generate 8.09 times less return on investment than Themac Resources. But when comparing it to its historical volatility, Bip Investment Corp is 16.03 times less risky than Themac Resources. It trades about 0.08 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Themac Resources Group on October 4, 2024 and sell it today you would lose (0.50) from holding Themac Resources Group or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Bip Investment Corp  vs.  Themac Resources Group

Bip Investment Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bip Investment Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Themac Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bip Investment and Themac Resources

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

The idea behind Bip Investment Corp and Themac Resources 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 CEOs Directory module to screen CEOs from public companies around the world.