Correlation Between Basic Energy and Berjaya Philippines

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

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

Diversification Opportunities for Basic Energy and Berjaya Philippines

0.19

Correlation Coefficient

Basic Energy  Berjaya Philippines

Average diversification

The 3 months correlation between Basic and Berjaya is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Basic Energy Corp and Berjaya Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berjaya Philippines and Basic Energy 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 Basic Energy Corp are associated (or correlated) with Berjaya Philippines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berjaya Philippines has no effect on the direction of Basic Energy i.e., Basic Energy and Berjaya Philippines go up and down completely randomly.

Pair Corralation between Basic Energy and Berjaya Philippines

Assuming the 90 days trading horizon Basic Energy Corp is expected to generate 0.48 times more return on investment than Berjaya Philippines. However, Basic Energy Corp is 2.07 times less risky than Berjaya Philippines. It trades about 0.02 of its potential returns per unit of risk. Berjaya Philippines is currently generating about 0.0 per unit of risk. If you would invest  14.00  in Basic Energy Corp on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Basic Energy Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	67.24%
Values	Daily Returns

Basic Energy Corp  vs.  Berjaya Philippines

Basic Energy Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Basic Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Basic Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Berjaya Philippines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berjaya Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Berjaya Philippines 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 Basic Energy and Berjaya Philippines

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

The idea behind Basic Energy Corp and Berjaya Philippines 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.