Correlation Between 1606 Corp and British Amer

Can any of the company-specific risk be diversified away by investing in both 1606 Corp and British Amer 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 1606 Corp and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1606 Corp and British American Tobacco, you can compare the effects of market volatilities on 1606 Corp and British Amer 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 1606 Corp with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1606 Corp and British Amer.

Diversification Opportunities for 1606 Corp and British Amer

0.45

Correlation Coefficient

1606 Corp  British Amer

Very weak diversification

The 3 months correlation between 1606 and British is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding 1606 Corp and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and 1606 Corp 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 1606 Corp are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of 1606 Corp i.e., 1606 Corp and British Amer go up and down completely randomly.

Pair Corralation between 1606 Corp and British Amer

Given the investment horizon of 90 days 1606 Corp is expected to under-perform the British Amer. In addition to that, 1606 Corp is 24.01 times more volatile than British American Tobacco. It trades about -0.01 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.47 per unit of volatility. If you would invest  3,511  in British American Tobacco on September 4, 2024 and sell it today you would earn a total of  262.00  from holding British American Tobacco or generate 7.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

1606 Corp  vs.  British American Tobacco

1606 Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1606 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

British American Tobacco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in British American Tobacco are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, British Amer is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with 1606 Corp and British Amer

The main advantage of trading using opposite 1606 Corp and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1606 Corp position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.

The idea behind 1606 Corp and British American Tobacco 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 Directory module to find actively traded commodities issued by global exchanges.