Correlation Between Imperial Brands and Bisichi Mining

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

By analyzing existing cross correlation between Imperial Brands PLC and Bisichi Mining PLC, you can compare the effects of market volatilities on Imperial Brands and Bisichi Mining 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 Imperial Brands with a short position of Bisichi Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Bisichi Mining.

Diversification Opportunities for Imperial Brands and Bisichi Mining

-0.31

Correlation Coefficient

Imperial Brands  Bisichi Mining

Very good diversification

The 3 months correlation between Imperial and Bisichi is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Bisichi Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisichi Mining PLC and Imperial Brands 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 Imperial Brands PLC are associated (or correlated) with Bisichi Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisichi Mining PLC has no effect on the direction of Imperial Brands i.e., Imperial Brands and Bisichi Mining go up and down completely randomly.

Pair Corralation between Imperial Brands and Bisichi Mining

Assuming the 90 days trading horizon Imperial Brands PLC is expected to generate 0.52 times more return on investment than Bisichi Mining. However, Imperial Brands PLC is 1.91 times less risky than Bisichi Mining. It trades about 0.25 of its potential returns per unit of risk. Bisichi Mining PLC is currently generating about -0.05 per unit of risk. If you would invest  225,068  in Imperial Brands PLC on October 24, 2024 and sell it today you would earn a total of  35,432  from holding Imperial Brands PLC or generate 15.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Imperial Brands PLC  vs.  Bisichi Mining PLC

Imperial Brands PLC

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Brands PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Imperial Brands exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bisichi Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bisichi Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bisichi Mining is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Imperial Brands and Bisichi Mining

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

The idea behind Imperial Brands PLC and Bisichi Mining 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.