Correlation Between BASFAAB WT and XAGING CT

Can any of the company-specific risk be diversified away by investing in both BASFAAB WT and XAGING CT 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 BASFAAB WT and XAGING CT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BASFAAB WT OPEN and XAGING CT, you can compare the effects of market volatilities on BASFAAB WT and XAGING CT 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 BASFAAB WT with a short position of XAGING CT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASFAAB WT and XAGING CT.

Diversification Opportunities for BASFAAB WT and XAGING CT

0.0

Correlation Coefficient

BASFAAB WT  XAGING CT

Pay attention - limited upside

The 3 months correlation between BASFAAB and XAGING is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BASFAAB WT OPEN and XAGING CT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAGING CT and BASFAAB WT 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 BASFAAB WT OPEN are associated (or correlated) with XAGING CT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAGING CT has no effect on the direction of BASFAAB WT i.e., BASFAAB WT and XAGING CT go up and down completely randomly.

Pair Corralation between BASFAAB WT and XAGING CT

If you would invest (100.00) in XAGING CT on September 12, 2024 and sell it today you would earn a total of  100.00  from holding XAGING CT or generate -100.0% return on investment over 90 days.

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

BASFAAB WT OPEN  vs.  XAGING CT

BASFAAB WT OPEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BASFAAB WT OPEN has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, BASFAAB WT is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

XAGING CT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XAGING CT has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, XAGING CT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BASFAAB WT and XAGING CT

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

The idea behind BASFAAB WT OPEN and XAGING CT 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.