Correlation Between BPS TECHNOLOGY and SRI TRANG

Can any of the company-specific risk be diversified away by investing in both BPS TECHNOLOGY and SRI TRANG 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 SRI TRANG 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 SRI TRANG GLOVES, you can compare the effects of market volatilities on BPS TECHNOLOGY and SRI TRANG 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 SRI TRANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BPS TECHNOLOGY and SRI TRANG.

Diversification Opportunities for BPS TECHNOLOGY and SRI TRANG

0.24

Correlation Coefficient

BPS TECHNOLOGY  SRI TRANG

Modest diversification

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

Pair Corralation between BPS TECHNOLOGY and SRI TRANG

Assuming the 90 days trading horizon BPS TECHNOLOGY PUBLIC is expected to generate 1.01 times more return on investment than SRI TRANG. However, BPS TECHNOLOGY is 1.01 times more volatile than SRI TRANG GLOVES. It trades about 0.01 of its potential returns per unit of risk. SRI TRANG GLOVES is currently generating about -0.21 per unit of risk. If you would invest  51.00  in BPS TECHNOLOGY PUBLIC on December 20, 2024 and sell it today you would earn a total of  0.00  from holding BPS TECHNOLOGY PUBLIC or generate 0.0% return on investment over 90 days.

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

BPS TECHNOLOGY PUBLIC  vs.  SRI TRANG GLOVES

BPS TECHNOLOGY PUBLIC

Risk-Adjusted Performance

Very Weak

Over the last 90 days BPS TECHNOLOGY PUBLIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, BPS TECHNOLOGY is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

SRI TRANG GLOVES

Risk-Adjusted Performance

Very Weak

Over the last 90 days SRI TRANG GLOVES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BPS TECHNOLOGY and SRI TRANG

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

The idea behind BPS TECHNOLOGY PUBLIC and SRI TRANG GLOVES 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.