Correlation Between DS Smith and Bisichi Mining

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

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

Diversification Opportunities for DS Smith and Bisichi Mining

-0.23

Correlation Coefficient

DS Smith  Bisichi Mining

Very good diversification

The 3 months correlation between SMDS and Bisichi is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding DS Smith 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 DS Smith 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 DS Smith 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 DS Smith i.e., DS Smith and Bisichi Mining go up and down completely randomly.

Pair Corralation between DS Smith and Bisichi Mining

Assuming the 90 days trading horizon DS Smith PLC is expected to under-perform the Bisichi Mining. In addition to that, DS Smith is 1.15 times more volatile than Bisichi Mining PLC. It trades about -0.02 of its total potential returns per unit of risk. Bisichi Mining PLC is currently generating about 0.29 per unit of volatility. If you would invest  10,750  in Bisichi Mining PLC on September 15, 2024 and sell it today you would earn a total of  750.00  from holding Bisichi Mining PLC or generate 6.98% return on investment over 90 days.

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

DS Smith PLC  vs.  Bisichi Mining PLC

DS Smith PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DS Smith PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DS Smith unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bisichi Mining PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bisichi Mining PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bisichi Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DS Smith and Bisichi Mining

The main advantage of trading using opposite DS Smith and Bisichi Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DS Smith 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 DS Smith 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.