Correlation Between Young Cos and BH Macro

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

By analyzing existing cross correlation between Young Cos Brewery and BH Macro Limited, you can compare the effects of market volatilities on Young Cos and BH Macro 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 Young Cos with a short position of BH Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and BH Macro.

Diversification Opportunities for Young Cos and BH Macro

0.45

Correlation Coefficient

Young Cos  BH Macro

Very weak diversification

The 3 months correlation between Young and BHMU is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro Limited and Young Cos 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 Young Cos Brewery are associated (or correlated) with BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of Young Cos i.e., Young Cos and BH Macro go up and down completely randomly.

Pair Corralation between Young Cos and BH Macro

Assuming the 90 days trading horizon Young Cos is expected to generate 20.85 times less return on investment than BH Macro. But when comparing it to its historical volatility, Young Cos Brewery is 1.04 times less risky than BH Macro. It trades about 0.0 of its potential returns per unit of risk. BH Macro Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  390.00  in BH Macro Limited on September 3, 2024 and sell it today you would earn a total of  26.00  from holding BH Macro Limited or generate 6.67% return on investment over 90 days.

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

Young Cos Brewery  vs.  BH Macro Limited

Young Cos Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Young Cos Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Young Cos is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BH Macro Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BH Macro Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, BH Macro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Young Cos and BH Macro

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

The idea behind Young Cos Brewery and BH Macro Limited 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.