Correlation Between BES Engineering and Acter

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

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

Diversification Opportunities for BES Engineering and Acter

-0.39

Correlation Coefficient

BES Engineering  Acter

Very good diversification

The 3 months correlation between BES and Acter is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Acter Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acter and BES Engineering 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 BES Engineering Co are associated (or correlated) with Acter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acter has no effect on the direction of BES Engineering i.e., BES Engineering and Acter go up and down completely randomly.

Pair Corralation between BES Engineering and Acter

Assuming the 90 days trading horizon BES Engineering Co is expected to under-perform the Acter. But the stock apears to be less risky and, when comparing its historical volatility, BES Engineering Co is 1.09 times less risky than Acter. The stock trades about -0.36 of its potential returns per unit of risk. The Acter Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  35,713  in Acter Co on October 9, 2024 and sell it today you would earn a total of  2,437  from holding Acter Co or generate 6.82% return on investment over 90 days.

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

BES Engineering Co  vs.  Acter Co

BES Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BES Engineering Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Acter

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acter Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acter showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BES Engineering and Acter

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

The idea behind BES Engineering Co and Acter 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.