Correlation Between BTS Group and Quality Houses

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

By analyzing existing cross correlation between BTS Group Holdings and Quality Houses Public, you can compare the effects of market volatilities on BTS Group and Quality Houses 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 BTS Group with a short position of Quality Houses. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTS Group and Quality Houses.

Diversification Opportunities for BTS Group and Quality Houses

0.34

Correlation Coefficient

BTS Group  Quality Houses

Weak diversification

The 3 months correlation between BTS and Quality is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group Holdings and Quality Houses Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Houses Public and BTS Group 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 BTS Group Holdings are associated (or correlated) with Quality Houses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Houses Public has no effect on the direction of BTS Group i.e., BTS Group and Quality Houses go up and down completely randomly.

Pair Corralation between BTS Group and Quality Houses

Assuming the 90 days trading horizon BTS Group Holdings is expected to generate 2.33 times more return on investment than Quality Houses. However, BTS Group is 2.33 times more volatile than Quality Houses Public. It trades about -0.04 of its potential returns per unit of risk. Quality Houses Public is currently generating about -0.11 per unit of risk. If you would invest  610.00  in BTS Group Holdings on December 28, 2024 and sell it today you would lose (50.00) from holding BTS Group Holdings or give up 8.2% of portfolio value over 90 days.

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

BTS Group Holdings  vs.  Quality Houses Public

BTS Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BTS Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Quality Houses Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quality Houses Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with BTS Group and Quality Houses

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

The idea behind BTS Group Holdings and Quality Houses Public 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.