Correlation Between EPAM Systems and BigBearai Holdings

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

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

Diversification Opportunities for EPAM Systems and BigBearai Holdings

0.73

Correlation Coefficient

EPAM Systems  BigBearai Holdings

Poor diversification

The 3 months correlation between EPAM and BigBearai is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and BigBearai Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BigBearai Holdings and EPAM 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 EPAM Systems are associated (or correlated) with BigBearai Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BigBearai Holdings has no effect on the direction of EPAM Systems i.e., EPAM Systems and BigBearai Holdings go up and down completely randomly.

Pair Corralation between EPAM Systems and BigBearai Holdings

Given the investment horizon of 90 days EPAM Systems is expected to generate 2.35 times less return on investment than BigBearai Holdings. But when comparing it to its historical volatility, EPAM Systems is 2.3 times less risky than BigBearai Holdings. It trades about 0.15 of its potential returns per unit of risk. BigBearai Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  144.00  in BigBearai Holdings on September 3, 2024 and sell it today you would earn a total of  85.00  from holding BigBearai Holdings or generate 59.03% return on investment over 90 days.

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

EPAM Systems  vs.  BigBearai Holdings

EPAM Systems

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EPAM Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, EPAM Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

BigBearai Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BigBearai Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, BigBearai Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EPAM Systems and BigBearai Holdings

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

The idea behind EPAM Systems and BigBearai 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.