Correlation Between Bentley Systems and Applovin Corp

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

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

Diversification Opportunities for Bentley Systems and Applovin Corp

-0.41

Correlation Coefficient

Bentley Systems  Applovin Corp

Very good diversification

The 3 months correlation between Bentley and Applovin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bentley Systems and Applovin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applovin Corp and Bentley Systems 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 Bentley Systems are associated (or correlated) with Applovin Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applovin Corp has no effect on the direction of Bentley Systems i.e., Bentley Systems and Applovin Corp go up and down completely randomly.

Pair Corralation between Bentley Systems and Applovin Corp

Considering the 90-day investment horizon Bentley Systems is expected to generate 77.26 times less return on investment than Applovin Corp. But when comparing it to its historical volatility, Bentley Systems is 4.35 times less risky than Applovin Corp. It trades about 0.02 of its potential returns per unit of risk. Applovin Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  8,813  in Applovin Corp on August 31, 2024 and sell it today you would earn a total of  24,043  from holding Applovin Corp or generate 272.81% return on investment over 90 days.

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

Bentley Systems  vs.  Applovin Corp

Bentley Systems

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bentley Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Bentley Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Applovin Corp

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Applovin Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Applovin Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bentley Systems and Applovin Corp

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

The idea behind Bentley Systems and Applovin Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.