Correlation Between Basic Energy and Benguet Corp

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

By analyzing existing cross correlation between Basic Energy Corp and Benguet Corp A, you can compare the effects of market volatilities on Basic Energy and Benguet Corp 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 Basic Energy with a short position of Benguet Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Energy and Benguet Corp.

Diversification Opportunities for Basic Energy and Benguet Corp

0.15

Correlation Coefficient

Basic Energy  Benguet Corp

Average diversification

The 3 months correlation between Basic and Benguet is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Basic Energy Corp and Benguet Corp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benguet Corp A and Basic Energy 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 Basic Energy Corp are associated (or correlated) with Benguet Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benguet Corp A has no effect on the direction of Basic Energy i.e., Basic Energy and Benguet Corp go up and down completely randomly.

Pair Corralation between Basic Energy and Benguet Corp

Assuming the 90 days trading horizon Basic Energy Corp is expected to under-perform the Benguet Corp. In addition to that, Basic Energy is 2.85 times more volatile than Benguet Corp A. It trades about -0.01 of its total potential returns per unit of risk. Benguet Corp A is currently generating about 0.05 per unit of volatility. If you would invest  422.00  in Benguet Corp A on April 22, 2025 and sell it today you would earn a total of  13.00  from holding Benguet Corp A or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.05%
Values	Daily Returns

Basic Energy Corp  vs.  Benguet Corp A

Basic Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Basic Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Basic Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Benguet Corp A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benguet Corp A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Benguet Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Basic Energy and Benguet Corp

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

The idea behind Basic Energy Corp and Benguet Corp A 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.