Correlation Between Bri Chem and Bristow

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

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

Diversification Opportunities for Bri Chem and Bristow

-0.2

Correlation Coefficient

Bri Chem  Bristow

Good diversification

The 3 months correlation between Bri and Bristow is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and Bristow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristow Group and Bri Chem 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 Bri Chem Corp are associated (or correlated) with Bristow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristow Group has no effect on the direction of Bri Chem i.e., Bri Chem and Bristow go up and down completely randomly.

Pair Corralation between Bri Chem and Bristow

Assuming the 90 days horizon Bri Chem Corp is expected to generate 2.96 times more return on investment than Bristow. However, Bri Chem is 2.96 times more volatile than Bristow Group. It trades about 0.01 of its potential returns per unit of risk. Bristow Group is currently generating about -0.01 per unit of risk. If you would invest  22.00  in Bri Chem Corp on September 4, 2024 and sell it today you would lose (3.00) from holding Bri Chem Corp or give up 13.64% of portfolio value over 90 days.

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

Bri Chem Corp  vs.  Bristow Group

Bri Chem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bri Chem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bri Chem is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Bristow Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bri Chem and Bristow

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

The idea behind Bri Chem Corp and Bristow Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.