Correlation Between Astra Veda and Blackbaud

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

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

Diversification Opportunities for Astra Veda and Blackbaud

-0.02

Correlation Coefficient

Astra Veda  Blackbaud

Good diversification

The 3 months correlation between Astra and Blackbaud is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Astra Veda and Blackbaud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackbaud and Astra Veda 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 Astra Veda are associated (or correlated) with Blackbaud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackbaud has no effect on the direction of Astra Veda i.e., Astra Veda and Blackbaud go up and down completely randomly.

Pair Corralation between Astra Veda and Blackbaud

Given the investment horizon of 90 days Astra Veda is expected to generate 7.48 times more return on investment than Blackbaud. However, Astra Veda is 7.48 times more volatile than Blackbaud. It trades about 0.05 of its potential returns per unit of risk. Blackbaud is currently generating about -0.02 per unit of risk. If you would invest  0.05  in Astra Veda on September 14, 2024 and sell it today you would lose (0.02) from holding Astra Veda or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Astra Veda  vs.  Blackbaud

Astra Veda

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astra Veda are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Astra Veda sustained solid returns over the last few months and may actually be approaching a breakup point.

Blackbaud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Blackbaud is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astra Veda and Blackbaud

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

The idea behind Astra Veda and Blackbaud 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.