Correlation Between BPS TECHNOLOGY and Stars Microelectronics
Can any of the company-specific risk be diversified away by investing in both BPS TECHNOLOGY and Stars Microelectronics 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 Stars Microelectronics 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 Stars Microelectronics Public, you can compare the effects of market volatilities on BPS TECHNOLOGY and Stars Microelectronics 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 Stars Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPS TECHNOLOGY and Stars Microelectronics.
Diversification Opportunities for BPS TECHNOLOGY and Stars Microelectronics
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BPS and Stars is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding BPS TECHNOLOGY PUBLIC and Stars Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stars Microelectronics 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 Stars Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stars Microelectronics has no effect on the direction of BPS TECHNOLOGY i.e., BPS TECHNOLOGY and Stars Microelectronics go up and down completely randomly.
Pair Corralation between BPS TECHNOLOGY and Stars Microelectronics
Assuming the 90 days trading horizon BPS TECHNOLOGY PUBLIC is expected to generate 1.3 times more return on investment than Stars Microelectronics. However, BPS TECHNOLOGY is 1.3 times more volatile than Stars Microelectronics Public. It trades about 0.1 of its potential returns per unit of risk. Stars Microelectronics Public is currently generating about -0.31 per unit of risk. If you would invest 50.00 in BPS TECHNOLOGY PUBLIC on December 28, 2024 and sell it today you would earn a total of 7.00 from holding BPS TECHNOLOGY PUBLIC or generate 14.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BPS TECHNOLOGY PUBLIC vs. Stars Microelectronics Public
Performance |
Timeline |
BPS TECHNOLOGY PUBLIC |
Stars Microelectronics |
BPS TECHNOLOGY and Stars Microelectronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BPS TECHNOLOGY and Stars Microelectronics
The main advantage of trading using opposite BPS TECHNOLOGY and Stars Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BPS TECHNOLOGY position performs unexpectedly, Stars Microelectronics 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 Stars Microelectronics will offset losses from the drop in Stars Microelectronics' long position.BPS TECHNOLOGY vs. LH Hotel Leasehold | BPS TECHNOLOGY vs. Bhiraj Office Leasehold | BPS TECHNOLOGY vs. Communication System Solution | BPS TECHNOLOGY vs. Mitsib Leasing Public |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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