Correlation Between BRP and Fenbo Holdings

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

By analyzing existing cross correlation between BRP Inc and Fenbo Holdings Limited, you can compare the effects of market volatilities on BRP and Fenbo Holdings 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 BRP with a short position of Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and Fenbo Holdings.

Diversification Opportunities for BRP and Fenbo Holdings

0.78

Correlation Coefficient

BRP  Fenbo Holdings

Poor diversification

The 3 months correlation between BRP and Fenbo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings and BRP 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 BRP Inc are associated (or correlated) with Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of BRP i.e., BRP and Fenbo Holdings go up and down completely randomly.

Pair Corralation between BRP and Fenbo Holdings

Given the investment horizon of 90 days BRP Inc is expected to under-perform the Fenbo Holdings. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 2.15 times less risky than Fenbo Holdings. The stock trades about -0.15 of its potential returns per unit of risk. The Fenbo Holdings Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  147.00  in Fenbo Holdings Limited on December 26, 2024 and sell it today you would lose (22.00) from holding Fenbo Holdings Limited or give up 14.97% of portfolio value over 90 days.

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

BRP Inc  vs.  Fenbo Holdings Limited

BRP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRP Inc 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fenbo Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fenbo Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Fenbo Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BRP and Fenbo Holdings

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

The idea behind BRP Inc and Fenbo Holdings Limited 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.