Correlation Between Bonso Electronics and Kraken Robotics

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

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

Diversification Opportunities for Bonso Electronics and Kraken Robotics

-0.57

Correlation Coefficient

Bonso Electronics  Kraken Robotics

Excellent diversification

The 3 months correlation between Bonso and Kraken is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bonso Electronics Internationa and Kraken Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Robotics and Bonso Electronics 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 Bonso Electronics International are associated (or correlated) with Kraken Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Robotics has no effect on the direction of Bonso Electronics i.e., Bonso Electronics and Kraken Robotics go up and down completely randomly.

Pair Corralation between Bonso Electronics and Kraken Robotics

If you would invest  131.00  in Kraken Robotics on September 25, 2024 and sell it today you would earn a total of  49.00  from holding Kraken Robotics or generate 37.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.44%
Values	Daily Returns

Bonso Electronics Internationa  vs.  Kraken Robotics

Bonso Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonso Electronics International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bonso Electronics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Kraken Robotics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kraken Robotics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Kraken Robotics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bonso Electronics and Kraken Robotics

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

The idea behind Bonso Electronics International and Kraken Robotics 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.