Correlation Between Viva Leisure and BSP Financial

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

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

Diversification Opportunities for Viva Leisure and BSP Financial

-0.34

Correlation Coefficient

Viva Leisure  BSP Financial

Very good diversification

The 3 months correlation between Viva and BSP is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Viva Leisure 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 Viva Leisure 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 Viva Leisure 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 Viva Leisure i.e., Viva Leisure and BSP Financial go up and down completely randomly.

Pair Corralation between Viva Leisure and BSP Financial

Assuming the 90 days trading horizon Viva Leisure is expected to under-perform the BSP Financial. In addition to that, Viva Leisure is 1.43 times more volatile than BSP Financial Group. It trades about -0.1 of its total potential returns per unit of risk. BSP Financial Group is currently generating about 0.14 per unit of volatility. If you would invest  658.00  in BSP Financial Group on December 11, 2024 and sell it today you would earn a total of  64.00  from holding BSP Financial Group or generate 9.73% return on investment over 90 days.

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

Viva Leisure  vs.  BSP Financial Group

Viva Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viva Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 uncertain essential indicators, BSP Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Viva Leisure and BSP Financial

The main advantage of trading using opposite Viva Leisure and BSP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viva Leisure 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 Viva Leisure 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.