Correlation Between Strong H and Brogent Technologies

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

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

Diversification Opportunities for Strong H and Brogent Technologies

-0.62

Correlation Coefficient

Strong H  Brogent Technologies

Excellent diversification

The 3 months correlation between Strong and Brogent is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Strong H Machinery and Brogent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brogent Technologies and Strong H 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 Strong H Machinery are associated (or correlated) with Brogent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brogent Technologies has no effect on the direction of Strong H i.e., Strong H and Brogent Technologies go up and down completely randomly.

Pair Corralation between Strong H and Brogent Technologies

Assuming the 90 days trading horizon Strong H is expected to generate 5.11 times less return on investment than Brogent Technologies. But when comparing it to its historical volatility, Strong H Machinery is 2.39 times less risky than Brogent Technologies. It trades about 0.02 of its potential returns per unit of risk. Brogent Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11,750  in Brogent Technologies on October 8, 2024 and sell it today you would earn a total of  2,550  from holding Brogent Technologies or generate 21.7% return on investment over 90 days.

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

Strong H Machinery  vs.  Brogent Technologies

Strong H Machinery

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strong H Machinery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Strong H may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Brogent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brogent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Strong H and Brogent Technologies

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

The idea behind Strong H Machinery and Brogent Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.