Correlation Between BP PLC and CODERE ONLINE

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

By analyzing existing cross correlation between BP PLC DZ1 and CODERE ONLINE LUX, you can compare the effects of market volatilities on BP PLC and CODERE ONLINE 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 BP PLC with a short position of CODERE ONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP PLC and CODERE ONLINE.

Diversification Opportunities for BP PLC and CODERE ONLINE

0.26

Correlation Coefficient

BP PLC  CODERE ONLINE

Modest diversification

The 3 months correlation between BPE and CODERE is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BP PLC DZ1 and CODERE ONLINE LUX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CODERE ONLINE LUX and BP PLC 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 BP PLC DZ1 are associated (or correlated) with CODERE ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CODERE ONLINE LUX has no effect on the direction of BP PLC i.e., BP PLC and CODERE ONLINE go up and down completely randomly.

Pair Corralation between BP PLC and CODERE ONLINE

Assuming the 90 days horizon BP PLC DZ1 is expected to generate 0.82 times more return on investment than CODERE ONLINE. However, BP PLC DZ1 is 1.22 times less risky than CODERE ONLINE. It trades about 0.08 of its potential returns per unit of risk. CODERE ONLINE LUX is currently generating about -0.03 per unit of risk. If you would invest  457.00  in BP PLC DZ1 on December 19, 2024 and sell it today you would earn a total of  47.00  from holding BP PLC DZ1 or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

BP PLC DZ1  vs.  CODERE ONLINE LUX

BP PLC DZ1

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BP PLC DZ1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BP PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CODERE ONLINE LUX

Risk-Adjusted Performance

Very Weak

Over the last 90 days CODERE ONLINE LUX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CODERE ONLINE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BP PLC and CODERE ONLINE

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

The idea behind BP PLC DZ1 and CODERE ONLINE LUX 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..