Correlation Between Generative and BSQUARE

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

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

Diversification Opportunities for Generative and BSQUARE

-0.04

Correlation Coefficient

Generative  BSQUARE

Good diversification

The 3 months correlation between Generative and BSQUARE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Generative AI Solutions and BSQUARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSQUARE and Generative 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 Generative AI Solutions are associated (or correlated) with BSQUARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSQUARE has no effect on the direction of Generative i.e., Generative and BSQUARE go up and down completely randomly.

Pair Corralation between Generative and BSQUARE

Assuming the 90 days horizon Generative AI Solutions is expected to generate 8.17 times more return on investment than BSQUARE. However, Generative is 8.17 times more volatile than BSQUARE. It trades about 0.03 of its potential returns per unit of risk. BSQUARE is currently generating about -0.23 per unit of risk. If you would invest  89.00  in Generative AI Solutions on October 24, 2024 and sell it today you would lose (73.00) from holding Generative AI Solutions or give up 82.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.08%
Values	Daily Returns

Generative AI Solutions  vs.  BSQUARE

Generative AI Solutions

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Generative AI Solutions are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Generative reported solid returns over the last few months and may actually be approaching a breakup point.

BSQUARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSQUARE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BSQUARE is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Generative and BSQUARE

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

The idea behind Generative AI Solutions and BSQUARE 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.