Correlation Between BPS TECHNOLOGY and Grande Hospitality

Can any of the company-specific risk be diversified away by investing in both BPS TECHNOLOGY and Grande Hospitality 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 BPS TECHNOLOGY and Grande Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BPS TECHNOLOGY PUBLIC and Grande Hospitality Real, you can compare the effects of market volatilities on BPS TECHNOLOGY and Grande Hospitality 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 BPS TECHNOLOGY with a short position of Grande Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPS TECHNOLOGY and Grande Hospitality.

Diversification Opportunities for BPS TECHNOLOGY and Grande Hospitality

0.4

Correlation Coefficient

BPS TECHNOLOGY  Grande Hospitality

Very weak diversification

The 3 months correlation between BPS and Grande is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BPS TECHNOLOGY PUBLIC and Grande Hospitality Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Hospitality Real and BPS TECHNOLOGY 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 BPS TECHNOLOGY PUBLIC are associated (or correlated) with Grande Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Hospitality Real has no effect on the direction of BPS TECHNOLOGY i.e., BPS TECHNOLOGY and Grande Hospitality go up and down completely randomly.

Pair Corralation between BPS TECHNOLOGY and Grande Hospitality

Assuming the 90 days trading horizon BPS TECHNOLOGY PUBLIC is expected to generate 2.73 times more return on investment than Grande Hospitality. However, BPS TECHNOLOGY is 2.73 times more volatile than Grande Hospitality Real. It trades about 0.14 of its potential returns per unit of risk. Grande Hospitality Real is currently generating about 0.06 per unit of risk. If you would invest  52.00  in BPS TECHNOLOGY PUBLIC on December 30, 2024 and sell it today you would earn a total of  4.00  from holding BPS TECHNOLOGY PUBLIC or generate 7.69% return on investment over 90 days.

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

BPS TECHNOLOGY PUBLIC  vs.  Grande Hospitality Real

BPS TECHNOLOGY PUBLIC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BPS TECHNOLOGY PUBLIC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, BPS TECHNOLOGY disclosed solid returns over the last few months and may actually be approaching a breakup point.

Grande Hospitality Real

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grande Hospitality Real are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Grande Hospitality is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BPS TECHNOLOGY and Grande Hospitality

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

The idea behind BPS TECHNOLOGY PUBLIC and Grande Hospitality Real 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .