Correlation Between Asure Software and BBB Foods

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

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

Diversification Opportunities for Asure Software and BBB Foods

-0.05

Correlation Coefficient

Asure Software  BBB Foods

Good diversification

The 3 months correlation between Asure and BBB is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Asure Software and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and Asure Software 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 Asure Software are associated (or correlated) with BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Asure Software i.e., Asure Software and BBB Foods go up and down completely randomly.

Pair Corralation between Asure Software and BBB Foods

Given the investment horizon of 90 days Asure Software is expected to generate 7.99 times less return on investment than BBB Foods. But when comparing it to its historical volatility, Asure Software is 1.12 times less risky than BBB Foods. It trades about 0.01 of its potential returns per unit of risk. BBB Foods is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,750  in BBB Foods on September 20, 2024 and sell it today you would earn a total of  1,138  from holding BBB Foods or generate 65.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.9%
Values	Daily Returns

Asure Software  vs.  BBB Foods

Asure Software

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Asure Software is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BBB Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asure Software and BBB Foods

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

The idea behind Asure Software and BBB Foods 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.