Correlation Between BA Airport and President Automobile

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

By analyzing existing cross correlation between BA Airport Leasehold and President Automobile Industries, you can compare the effects of market volatilities on BA Airport and President Automobile 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 BA Airport with a short position of President Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of BA Airport and President Automobile.

Diversification Opportunities for BA Airport and President Automobile

0.68

Correlation Coefficient

BA Airport  President Automobile

Poor diversification

The 3 months correlation between BAREIT and President is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BA Airport Leasehold and President Automobile Industrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Automobile and BA Airport 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 BA Airport Leasehold are associated (or correlated) with President Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Automobile has no effect on the direction of BA Airport i.e., BA Airport and President Automobile go up and down completely randomly.

Pair Corralation between BA Airport and President Automobile

Assuming the 90 days trading horizon BA Airport Leasehold is expected to generate 0.71 times more return on investment than President Automobile. However, BA Airport Leasehold is 1.4 times less risky than President Automobile. It trades about 0.07 of its potential returns per unit of risk. President Automobile Industries is currently generating about 0.01 per unit of risk. If you would invest  906.00  in BA Airport Leasehold on April 22, 2025 and sell it today you would earn a total of  29.00  from holding BA Airport Leasehold or generate 3.2% return on investment over 90 days.

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

BA Airport Leasehold  vs.  President Automobile Industrie

BA Airport Leasehold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BA Airport Leasehold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BA Airport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

President Automobile

Risk-Adjusted Performance

Insignificant

Over the last 90 days President Automobile Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, President Automobile is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BA Airport and President Automobile

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

The idea behind BA Airport Leasehold and President Automobile Industries 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.