Correlation Between CP ALL and BTS Group

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

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

Diversification Opportunities for CP ALL and BTS Group

-0.21

Correlation Coefficient

CP ALL  BTS Group

Very good diversification

The 3 months correlation between CPALL and BTS is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and BTS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group Holdings and CP ALL 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 CP ALL Public are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group Holdings has no effect on the direction of CP ALL i.e., CP ALL and BTS Group go up and down completely randomly.

Pair Corralation between CP ALL and BTS Group

Assuming the 90 days trading horizon CP ALL is expected to generate 7.28 times less return on investment than BTS Group. But when comparing it to its historical volatility, CP ALL Public is 1.38 times less risky than BTS Group. It trades about 0.04 of its potential returns per unit of risk. BTS Group Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  440.00  in BTS Group Holdings on September 4, 2024 and sell it today you would earn a total of  115.00  from holding BTS Group Holdings or generate 26.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CP ALL Public  vs.  BTS Group Holdings

CP ALL Public

Risk-Adjusted Performance

3 of 100

Insignificant

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

BTS Group Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, BTS Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CP ALL and BTS Group

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

The idea behind CP ALL Public and BTS Group Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.