Correlation Between BASE and ProStar Holdings

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

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

Diversification Opportunities for BASE and ProStar Holdings

0.1

Correlation Coefficient

BASE  ProStar Holdings

Average diversification

The 3 months correlation between BASE and ProStar is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and ProStar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProStar Holdings and BASE 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 BASE Inc are associated (or correlated) with ProStar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProStar Holdings has no effect on the direction of BASE i.e., BASE and ProStar Holdings go up and down completely randomly.

Pair Corralation between BASE and ProStar Holdings

Assuming the 90 days horizon BASE Inc is expected to generate 0.73 times more return on investment than ProStar Holdings. However, BASE Inc is 1.37 times less risky than ProStar Holdings. It trades about 0.06 of its potential returns per unit of risk. ProStar Holdings is currently generating about -0.02 per unit of risk. If you would invest  172.00  in BASE Inc on September 22, 2024 and sell it today you would earn a total of  21.00  from holding BASE Inc or generate 12.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

BASE Inc  vs.  ProStar Holdings

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

ProStar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProStar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BASE and ProStar Holdings

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

The idea behind BASE Inc and ProStar Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.