Correlation Between 00108WAF7 and BHCCN

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and BHCCN 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 00108WAF7 and BHCCN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and BHCCN 11 30 SEP 28, you can compare the effects of market volatilities on 00108WAF7 and BHCCN 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 00108WAF7 with a short position of BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and BHCCN.

Diversification Opportunities for 00108WAF7 and BHCCN

0.04

Correlation Coefficient

00108WAF7  BHCCN

Significant diversification

The 3 months correlation between 00108WAF7 and BHCCN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and BHCCN 11 30 SEP 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 11 30 and 00108WAF7 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 AEP TEX INC are associated (or correlated) with BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 11 30 has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and BHCCN go up and down completely randomly.

Pair Corralation between 00108WAF7 and BHCCN

Assuming the 90 days trading horizon 00108WAF7 is expected to generate 1.34 times less return on investment than BHCCN. In addition to that, 00108WAF7 is 1.96 times more volatile than BHCCN 11 30 SEP 28. It trades about 0.03 of its total potential returns per unit of risk. BHCCN 11 30 SEP 28 is currently generating about 0.08 per unit of volatility. If you would invest  9,454  in BHCCN 11 30 SEP 28 on December 27, 2024 and sell it today you would earn a total of  365.00  from holding BHCCN 11 30 SEP 28 or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.67%
Values	Daily Returns

AEP TEX INC  vs.  BHCCN 11 30 SEP 28

AEP TEX INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BHCCN 11 30

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BHCCN 11 30 SEP 28 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BHCCN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 00108WAF7 and BHCCN

The main advantage of trading using opposite 00108WAF7 and BHCCN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, BHCCN 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 BHCCN will offset losses from the drop in BHCCN's long position.

The idea behind AEP TEX INC and BHCCN 11 30 SEP 28 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.