Correlation Between BAKER and NuRAN Wireless

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

By analyzing existing cross correlation between BAKER HUGHES A and NuRAN Wireless, you can compare the effects of market volatilities on BAKER and NuRAN Wireless 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 BAKER with a short position of NuRAN Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAKER and NuRAN Wireless.

Diversification Opportunities for BAKER and NuRAN Wireless

0.37

Correlation Coefficient

BAKER  NuRAN Wireless

Weak diversification

The 3 months correlation between BAKER and NuRAN is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BAKER HUGHES A and NuRAN Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuRAN Wireless and BAKER 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 BAKER HUGHES A are associated (or correlated) with NuRAN Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuRAN Wireless has no effect on the direction of BAKER i.e., BAKER and NuRAN Wireless go up and down completely randomly.

Pair Corralation between BAKER and NuRAN Wireless

Assuming the 90 days trading horizon BAKER HUGHES A is expected to generate 0.12 times more return on investment than NuRAN Wireless. However, BAKER HUGHES A is 8.57 times less risky than NuRAN Wireless. It trades about -0.17 of its potential returns per unit of risk. NuRAN Wireless is currently generating about -0.11 per unit of risk. If you would invest  9,776  in BAKER HUGHES A on September 25, 2024 and sell it today you would lose (347.00) from holding BAKER HUGHES A or give up 3.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

BAKER HUGHES A  vs.  NuRAN Wireless

BAKER HUGHES A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAKER HUGHES A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAKER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NuRAN Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuRAN Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BAKER and NuRAN Wireless

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

The idea behind BAKER HUGHES A and NuRAN Wireless 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.