Correlation Between Batm Advanced and Falcon Oil

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

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

Diversification Opportunities for Batm Advanced and Falcon Oil

0.44

Correlation Coefficient

Batm Advanced  Falcon Oil

Very weak diversification

The 3 months correlation between Batm and Falcon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Batm Advanced Communications and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Batm Advanced 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 Batm Advanced Communications are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Batm Advanced i.e., Batm Advanced and Falcon Oil go up and down completely randomly.

Pair Corralation between Batm Advanced and Falcon Oil

Assuming the 90 days trading horizon Batm Advanced Communications is expected to generate 2.03 times more return on investment than Falcon Oil. However, Batm Advanced is 2.03 times more volatile than Falcon Oil Gas. It trades about -0.03 of its potential returns per unit of risk. Falcon Oil Gas is currently generating about -0.18 per unit of risk. If you would invest  2,080  in Batm Advanced Communications on September 23, 2024 and sell it today you would lose (232.00) from holding Batm Advanced Communications or give up 11.15% of portfolio value over 90 days.

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

Batm Advanced Communications  vs.  Falcon Oil Gas

Batm Advanced Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Falcon Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Batm Advanced and Falcon Oil

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

The idea behind Batm Advanced Communications and Falcon Oil Gas 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 Global Correlations module to find global opportunities by holding instruments from different markets.