Correlation Between Bus Online and Goodwill E

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

By analyzing existing cross correlation between Bus Online Co and Goodwill E Health, you can compare the effects of market volatilities on Bus Online and Goodwill E 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 Bus Online with a short position of Goodwill E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bus Online and Goodwill E.

Diversification Opportunities for Bus Online and Goodwill E

0.7

Correlation Coefficient

Bus Online  Goodwill E

Poor diversification

The 3 months correlation between Bus and Goodwill is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bus Online Co and Goodwill E Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodwill E Health and Bus Online 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 Bus Online Co are associated (or correlated) with Goodwill E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodwill E Health has no effect on the direction of Bus Online i.e., Bus Online and Goodwill E go up and down completely randomly.

Pair Corralation between Bus Online and Goodwill E

Assuming the 90 days trading horizon Bus Online Co is expected to under-perform the Goodwill E. But the stock apears to be less risky and, when comparing its historical volatility, Bus Online Co is 1.05 times less risky than Goodwill E. The stock trades about -0.11 of its potential returns per unit of risk. The Goodwill E Health is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,729  in Goodwill E Health on October 7, 2024 and sell it today you would lose (467.00) from holding Goodwill E Health or give up 17.11% of portfolio value over 90 days.

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

Bus Online Co  vs.  Goodwill E Health

Bus Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bus Online Co 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Goodwill E Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bus Online and Goodwill E

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

The idea behind Bus Online Co and Goodwill E Health 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.