Correlation Between Brompton Lifeco and Propel Holdings

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

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

Diversification Opportunities for Brompton Lifeco and Propel Holdings

-0.01

Correlation Coefficient

Brompton Lifeco  Propel Holdings

Good diversification

The 3 months correlation between Brompton and Propel is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Lifeco Split and Propel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Propel Holdings and Brompton Lifeco 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 Brompton Lifeco Split are associated (or correlated) with Propel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Propel Holdings has no effect on the direction of Brompton Lifeco i.e., Brompton Lifeco and Propel Holdings go up and down completely randomly.

Pair Corralation between Brompton Lifeco and Propel Holdings

Assuming the 90 days trading horizon Brompton Lifeco Split is expected to generate 0.6 times more return on investment than Propel Holdings. However, Brompton Lifeco Split is 1.66 times less risky than Propel Holdings. It trades about 0.03 of its potential returns per unit of risk. Propel Holdings is currently generating about -0.17 per unit of risk. If you would invest  832.00  in Brompton Lifeco Split on December 30, 2024 and sell it today you would earn a total of  21.00  from holding Brompton Lifeco Split or generate 2.52% return on investment over 90 days.

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

Brompton Lifeco Split  vs.  Propel Holdings

Brompton Lifeco Split

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Lifeco Split are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brompton Lifeco is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Propel Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Propel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential 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.

Pair Trading with Brompton Lifeco and Propel Holdings

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

The idea behind Brompton Lifeco Split and Propel 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.