Correlation Between Bestway Cement and Oil

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

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

Diversification Opportunities for Bestway Cement and Oil

0.38

Correlation Coefficient

Bestway Cement  Oil

Weak diversification

The 3 months correlation between Bestway and Oil is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bestway Cement and Oil and Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil and Gas and Bestway Cement 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 Bestway Cement are associated (or correlated) with Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil and Gas has no effect on the direction of Bestway Cement i.e., Bestway Cement and Oil go up and down completely randomly.

Pair Corralation between Bestway Cement and Oil

Assuming the 90 days trading horizon Bestway Cement is expected to generate 0.64 times more return on investment than Oil. However, Bestway Cement is 1.56 times less risky than Oil. It trades about 0.18 of its potential returns per unit of risk. Oil and Gas is currently generating about 0.05 per unit of risk. If you would invest  33,566  in Bestway Cement on December 30, 2024 and sell it today you would earn a total of  4,834  from holding Bestway Cement or generate 14.4% return on investment over 90 days.

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

Bestway Cement  vs.  Oil and Gas

Bestway Cement

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bestway Cement are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Bestway Cement sustained solid returns over the last few months and may actually be approaching a breakup point.

Oil and Gas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oil and Gas are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bestway Cement and Oil

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

The idea behind Bestway Cement and Oil and Gas 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 Global Correlations module to find global opportunities by holding instruments from different markets.