Correlation Between Creo Medical and BP Plc

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

By analyzing existing cross correlation between Creo Medical Group and BP plc, you can compare the effects of market volatilities on Creo Medical and BP Plc 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 Creo Medical with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creo Medical and BP Plc.

Diversification Opportunities for Creo Medical and BP Plc

0.69

Correlation Coefficient

Creo Medical  BP Plc

Poor diversification

The 3 months correlation between Creo and BP-A is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and Creo Medical 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 Creo Medical Group are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Creo Medical i.e., Creo Medical and BP Plc go up and down completely randomly.

Pair Corralation between Creo Medical and BP Plc

Assuming the 90 days trading horizon Creo Medical Group is expected to generate 2.3 times more return on investment than BP Plc. However, Creo Medical is 2.3 times more volatile than BP plc. It trades about -0.04 of its potential returns per unit of risk. BP plc is currently generating about -0.12 per unit of risk. If you would invest  2,170  in Creo Medical Group on October 7, 2024 and sell it today you would lose (270.00) from holding Creo Medical Group or give up 12.44% of portfolio value over 90 days.

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

Creo Medical Group  vs.  BP plc

Creo Medical Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creo Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BP plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Creo Medical and BP Plc

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

The idea behind Creo Medical Group and BP plc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.