Correlation Between Bewi Asa and Ice Fish

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

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

Diversification Opportunities for Bewi Asa and Ice Fish

-0.65

Correlation Coefficient

Bewi Asa  Ice Fish

Excellent diversification

The 3 months correlation between Bewi and Ice is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bewi Asa and Ice Fish Farm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ice Fish Farm and Bewi Asa 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 Bewi Asa are associated (or correlated) with Ice Fish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ice Fish Farm has no effect on the direction of Bewi Asa i.e., Bewi Asa and Ice Fish go up and down completely randomly.

Pair Corralation between Bewi Asa and Ice Fish

Assuming the 90 days trading horizon Bewi Asa is expected to generate 1.13 times more return on investment than Ice Fish. However, Bewi Asa is 1.13 times more volatile than Ice Fish Farm. It trades about 0.23 of its potential returns per unit of risk. Ice Fish Farm is currently generating about 0.1 per unit of risk. If you would invest  2,270  in Bewi Asa on September 14, 2024 and sell it today you would earn a total of  530.00  from holding Bewi Asa or generate 23.35% return on investment over 90 days.

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

Bewi Asa  vs.  Ice Fish Farm

Bewi Asa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bewi Asa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Bewi Asa is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Ice Fish Farm

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ice Fish Farm are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ice Fish displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bewi Asa and Ice Fish

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

The idea behind Bewi Asa and Ice Fish Farm 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.