Correlation Between Batm Advanced and Spuntech

Can any of the company-specific risk be diversified away by investing in both Batm Advanced and Spuntech 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 Spuntech 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 Spuntech, you can compare the effects of market volatilities on Batm Advanced and Spuntech 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 Spuntech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batm Advanced and Spuntech.

Diversification Opportunities for Batm Advanced and Spuntech

-0.04

Correlation Coefficient

Batm Advanced  Spuntech

Good diversification

The 3 months correlation between Batm and Spuntech is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Batm Advanced Communications and Spuntech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spuntech 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 Spuntech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spuntech has no effect on the direction of Batm Advanced i.e., Batm Advanced and Spuntech go up and down completely randomly.

Pair Corralation between Batm Advanced and Spuntech

Assuming the 90 days trading horizon Batm Advanced Communications is expected to under-perform the Spuntech. But the stock apears to be less risky and, when comparing its historical volatility, Batm Advanced Communications is 1.15 times less risky than Spuntech. The stock trades about -0.02 of its potential returns per unit of risk. The Spuntech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  31,505  in Spuntech on September 16, 2024 and sell it today you would earn a total of  11,185  from holding Spuntech or generate 35.5% return on investment over 90 days.

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

Batm Advanced Communications  vs.  Spuntech

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. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Spuntech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spuntech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Spuntech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Batm Advanced and Spuntech

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

The idea behind Batm Advanced Communications and Spuntech 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.