Correlation Between Couchbase and SimilarWeb

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

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

Diversification Opportunities for Couchbase and SimilarWeb

0.32

Correlation Coefficient

Couchbase  SimilarWeb

Weak diversification

The 3 months correlation between Couchbase and SimilarWeb is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Couchbase and SimilarWeb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SimilarWeb and Couchbase 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 Couchbase are associated (or correlated) with SimilarWeb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SimilarWeb has no effect on the direction of Couchbase i.e., Couchbase and SimilarWeb go up and down completely randomly.

Pair Corralation between Couchbase and SimilarWeb

Given the investment horizon of 90 days Couchbase is expected to generate 5.85 times less return on investment than SimilarWeb. In addition to that, Couchbase is 1.33 times more volatile than SimilarWeb. It trades about 0.04 of its total potential returns per unit of risk. SimilarWeb is currently generating about 0.29 per unit of volatility. If you would invest  904.00  in SimilarWeb on September 26, 2024 and sell it today you would earn a total of  562.00  from holding SimilarWeb or generate 62.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Couchbase  vs.  SimilarWeb

Couchbase

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Couchbase are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Couchbase may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SimilarWeb

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SimilarWeb are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SimilarWeb sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Couchbase and SimilarWeb

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

The idea behind Couchbase and SimilarWeb 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.