Correlation Between Transport International and British American

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

By analyzing existing cross correlation between Transport International Holdings and British American Tobacco, you can compare the effects of market volatilities on Transport International and British American 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 Transport International with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and British American.

Diversification Opportunities for Transport International and British American

-0.15

Correlation Coefficient

Transport International  British American

Good diversification

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

Pair Corralation between Transport International and British American

Assuming the 90 days horizon Transport International is expected to generate 3.15 times less return on investment than British American. In addition to that, Transport International is 2.73 times more volatile than British American Tobacco. It trades about 0.03 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.27 per unit of volatility. If you would invest  3,828  in British American Tobacco on May 6, 2025 and sell it today you would earn a total of  902.00  from holding British American Tobacco or generate 23.56% return on investment over 90 days.

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

Transport International Holdin  vs.  British American Tobacco

Transport International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transport International Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Transport International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

British American Tobacco

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in British American Tobacco are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, British American unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transport International and British American

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

The idea behind Transport International Holdings and British American Tobacco 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.