Correlation Between Brimag L and Danel

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

By analyzing existing cross correlation between Brimag L and Danel, you can compare the effects of market volatilities on Brimag L and Danel 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 Brimag L with a short position of Danel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brimag L and Danel.

Diversification Opportunities for Brimag L and Danel

0.23

Correlation Coefficient

Brimag L  Danel

Modest diversification

The 3 months correlation between Brimag and Danel is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brimag L and Danel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danel and Brimag L 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 Brimag L are associated (or correlated) with Danel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danel has no effect on the direction of Brimag L i.e., Brimag L and Danel go up and down completely randomly.

Pair Corralation between Brimag L and Danel

Assuming the 90 days trading horizon Brimag L is expected to generate 1.03 times more return on investment than Danel. However, Brimag L is 1.03 times more volatile than Danel. It trades about 0.15 of its potential returns per unit of risk. Danel is currently generating about -0.07 per unit of risk. If you would invest  156,000  in Brimag L on December 30, 2024 and sell it today you would earn a total of  23,900  from holding Brimag L or generate 15.32% return on investment over 90 days.

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

Brimag L  vs.  Danel

Brimag L

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brimag L are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brimag L sustained solid returns over the last few months and may actually be approaching a breakup point.

Danel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Brimag L and Danel

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

The idea behind Brimag L and Danel 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.