Correlation Between Mystate and BSP Financial

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Can any of the company-specific risk be diversified away by investing in both Mystate and BSP Financial 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 Mystate and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mystate and BSP Financial Group, you can compare the effects of market volatilities on Mystate and BSP Financial 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 Mystate with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mystate and BSP Financial.

Diversification Opportunities for Mystate and BSP Financial

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Mystate and BSP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mystate and BSP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSP Financial Group and Mystate 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 Mystate are associated (or correlated) with BSP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSP Financial Group has no effect on the direction of Mystate i.e., Mystate and BSP Financial go up and down completely randomly.

Pair Corralation between Mystate and BSP Financial

Assuming the 90 days trading horizon Mystate is expected to generate 0.74 times more return on investment than BSP Financial. However, Mystate is 1.35 times less risky than BSP Financial. It trades about 0.12 of its potential returns per unit of risk. BSP Financial Group is currently generating about 0.07 per unit of risk. If you would invest  275.00  in Mystate on October 21, 2024 and sell it today you would earn a total of  159.00  from holding Mystate or generate 57.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Mystate  vs.  BSP Financial Group

 Performance 
       Timeline  
Mystate 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Mystate are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mystate unveiled solid returns over the last few months and may actually be approaching a breakup point.
BSP Financial Group 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BSP Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, BSP Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mystate and BSP Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mystate and BSP Financial

The main advantage of trading using opposite Mystate and BSP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mystate position performs unexpectedly, BSP Financial 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 BSP Financial will offset losses from the drop in BSP Financial's long position.
The idea behind Mystate and BSP Financial Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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