Correlation Between Nable Communications and Bosung Power

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

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

Diversification Opportunities for Nable Communications and Bosung Power

-0.76

Correlation Coefficient

Nable Communications  Bosung Power

Pay attention - limited upside

The 3 months correlation between Nable and Bosung is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nable Communications and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology and Nable Communications 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 Nable Communications are associated (or correlated) with Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of Nable Communications i.e., Nable Communications and Bosung Power go up and down completely randomly.

Pair Corralation between Nable Communications and Bosung Power

Assuming the 90 days trading horizon Nable Communications is expected to under-perform the Bosung Power. But the stock apears to be less risky and, when comparing its historical volatility, Nable Communications is 1.77 times less risky than Bosung Power. The stock trades about -0.02 of its potential returns per unit of risk. The Bosung Power Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  416,500  in Bosung Power Technology on October 26, 2024 and sell it today you would lose (107,500) from holding Bosung Power Technology or give up 25.81% of portfolio value over 90 days.

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

Nable Communications  vs.  Bosung Power Technology

Nable Communications

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bosung Power Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nable Communications and Bosung Power

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

The idea behind Nable Communications and Bosung Power Technology 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.