Correlation Between Bassett Furniture and LeddarTech Holdings

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

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

Diversification Opportunities for Bassett Furniture and LeddarTech Holdings

-0.21

Correlation Coefficient

Bassett Furniture  LeddarTech Holdings

Very good diversification

The 3 months correlation between Bassett and LeddarTech is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and LeddarTech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeddarTech Holdings and Bassett Furniture 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 Bassett Furniture Industries are associated (or correlated) with LeddarTech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeddarTech Holdings has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and LeddarTech Holdings go up and down completely randomly.

Pair Corralation between Bassett Furniture and LeddarTech Holdings

Given the investment horizon of 90 days Bassett Furniture is expected to generate 8.77 times less return on investment than LeddarTech Holdings. But when comparing it to its historical volatility, Bassett Furniture Industries is 11.88 times less risky than LeddarTech Holdings. It trades about 0.1 of its potential returns per unit of risk. LeddarTech Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.48  in LeddarTech Holdings on September 3, 2024 and sell it today you would lose (0.57) from holding LeddarTech Holdings or give up 22.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Bassett Furniture Industries  vs.  LeddarTech Holdings

Bassett Furniture

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bassett Furniture Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Bassett Furniture may actually be approaching a critical reversion point that can send shares even higher in January 2025.

LeddarTech Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LeddarTech Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, LeddarTech Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bassett Furniture and LeddarTech Holdings

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

The idea behind Bassett Furniture Industries and LeddarTech 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.