Correlation Between BII Railway and Perdoceo Education

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

By analyzing existing cross correlation between BII Railway Transportation and Perdoceo Education, you can compare the effects of market volatilities on BII Railway and Perdoceo Education 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 BII Railway with a short position of Perdoceo Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Perdoceo Education.

Diversification Opportunities for BII Railway and Perdoceo Education

-0.44

Correlation Coefficient

BII Railway  Perdoceo Education

Very good diversification

The 3 months correlation between BII and Perdoceo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Perdoceo Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdoceo Education and BII Railway 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 BII Railway Transportation are associated (or correlated) with Perdoceo Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdoceo Education has no effect on the direction of BII Railway i.e., BII Railway and Perdoceo Education go up and down completely randomly.

Pair Corralation between BII Railway and Perdoceo Education

Assuming the 90 days horizon BII Railway Transportation is expected to generate 0.87 times more return on investment than Perdoceo Education. However, BII Railway Transportation is 1.15 times less risky than Perdoceo Education. It trades about 0.15 of its potential returns per unit of risk. Perdoceo Education is currently generating about 0.01 per unit of risk. If you would invest  2.65  in BII Railway Transportation on October 10, 2024 and sell it today you would earn a total of  0.10  from holding BII Railway Transportation or generate 3.77% return on investment over 90 days.

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

BII Railway Transportation  vs.  Perdoceo Education

BII Railway Transpor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BII Railway Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Perdoceo Education

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with BII Railway and Perdoceo Education

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

The idea behind BII Railway Transportation and Perdoceo Education 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.