Correlation Between Booster Co and COWINTECH

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

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

Diversification Opportunities for Booster Co and COWINTECH

-0.3

Correlation Coefficient

Booster Co  COWINTECH

Very good diversification

The 3 months correlation between Booster and COWINTECH is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Booster Co and COWINTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COWINTECH and Booster Co 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 Booster Co are associated (or correlated) with COWINTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COWINTECH has no effect on the direction of Booster Co i.e., Booster Co and COWINTECH go up and down completely randomly.

Pair Corralation between Booster Co and COWINTECH

Assuming the 90 days trading horizon Booster Co is expected to under-perform the COWINTECH. But the stock apears to be less risky and, when comparing its historical volatility, Booster Co is 3.43 times less risky than COWINTECH. The stock trades about -0.13 of its potential returns per unit of risk. The COWINTECH Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,305,489  in COWINTECH Co on December 2, 2024 and sell it today you would earn a total of  189,511  from holding COWINTECH Co or generate 14.52% return on investment over 90 days.

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

Booster Co  vs.  COWINTECH Co

Booster Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days Booster Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

COWINTECH

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COWINTECH Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COWINTECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Booster Co and COWINTECH

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

The idea behind Booster Co and COWINTECH Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .