Correlation Between Buildablock Corp and TransAKT

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

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

Diversification Opportunities for Buildablock Corp and TransAKT

-0.18

Correlation Coefficient

Buildablock Corp  TransAKT

Good diversification

The 3 months correlation between Buildablock and TransAKT is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Buildablock Corp and TransAKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAKT and Buildablock Corp 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 Buildablock Corp are associated (or correlated) with TransAKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAKT has no effect on the direction of Buildablock Corp i.e., Buildablock Corp and TransAKT go up and down completely randomly.

Pair Corralation between Buildablock Corp and TransAKT

Given the investment horizon of 90 days Buildablock Corp is expected to generate 3.61 times more return on investment than TransAKT. However, Buildablock Corp is 3.61 times more volatile than TransAKT. It trades about 0.33 of its potential returns per unit of risk. TransAKT is currently generating about 0.11 per unit of risk. If you would invest  175.00  in Buildablock Corp on September 14, 2024 and sell it today you would lose (115.00) from holding Buildablock Corp or give up 65.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Buildablock Corp  vs.  TransAKT

Buildablock Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Buildablock Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite sluggish fundamental drivers, Buildablock Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

TransAKT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Buildablock Corp and TransAKT

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

The idea behind Buildablock Corp and TransAKT 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.