Correlation Between Syrah Resources and BSP Financial

Can any of the company-specific risk be diversified away by investing in both Syrah Resources 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 Syrah Resources and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Syrah Resources and BSP Financial Group, you can compare the effects of market volatilities on Syrah Resources 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 Syrah Resources with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Syrah Resources and BSP Financial.

Diversification Opportunities for Syrah Resources and BSP Financial

0.1

Correlation Coefficient

Syrah Resources  BSP Financial

Average diversification

The 3 months correlation between Syrah and BSP is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Syrah Resources 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 Syrah Resources 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 Syrah Resources 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 Syrah Resources i.e., Syrah Resources and BSP Financial go up and down completely randomly.

Pair Corralation between Syrah Resources and BSP Financial

Assuming the 90 days trading horizon Syrah Resources is expected to generate 2.17 times more return on investment than BSP Financial. However, Syrah Resources is 2.17 times more volatile than BSP Financial Group. It trades about 0.25 of its potential returns per unit of risk. BSP Financial Group is currently generating about 0.15 per unit of risk. If you would invest  18.00  in Syrah Resources on December 19, 2024 and sell it today you would earn a total of  14.00  from holding Syrah Resources or generate 77.78% return on investment over 90 days.

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

Syrah Resources  vs.  BSP Financial Group

Syrah Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Syrah Resources are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Syrah Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

BSP Financial Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BSP Financial Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, BSP Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Syrah Resources and BSP Financial

The main advantage of trading using opposite Syrah Resources and BSP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Syrah Resources 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 Syrah Resources 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.