Correlation Between Banpu PCL and HMS Bergbau

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

By analyzing existing cross correlation between Banpu PCL and HMS Bergbau AG, you can compare the effects of market volatilities on Banpu PCL and HMS Bergbau 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 Banpu PCL with a short position of HMS Bergbau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banpu PCL and HMS Bergbau.

Diversification Opportunities for Banpu PCL and HMS Bergbau

-0.67

Correlation Coefficient

Banpu PCL  HMS Bergbau

Excellent diversification

The 3 months correlation between Banpu and HMS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Banpu PCL and HMS Bergbau AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMS Bergbau AG and Banpu PCL 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 Banpu PCL are associated (or correlated) with HMS Bergbau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMS Bergbau AG has no effect on the direction of Banpu PCL i.e., Banpu PCL and HMS Bergbau go up and down completely randomly.

Pair Corralation between Banpu PCL and HMS Bergbau

Assuming the 90 days trading horizon Banpu PCL is expected to generate 12.29 times more return on investment than HMS Bergbau. However, Banpu PCL is 12.29 times more volatile than HMS Bergbau AG. It trades about 0.03 of its potential returns per unit of risk. HMS Bergbau AG is currently generating about 0.07 per unit of risk. If you would invest  15.00  in Banpu PCL on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Banpu PCL or generate 0.0% return on investment over 90 days.

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

Banpu PCL  vs.  HMS Bergbau AG

Banpu PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banpu PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

HMS Bergbau AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HMS Bergbau AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, HMS Bergbau may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Banpu PCL and HMS Bergbau

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

The idea behind Banpu PCL and HMS Bergbau AG 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.