Correlation Between Akwel SA and Bassac

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

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

Diversification Opportunities for Akwel SA and Bassac

-0.9

Correlation Coefficient

Akwel SA  Bassac

Pay attention - limited upside

The 3 months correlation between Akwel and Bassac is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Akwel SA and Bassac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassac and Akwel SA 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 Akwel SA are associated (or correlated) with Bassac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassac has no effect on the direction of Akwel SA i.e., Akwel SA and Bassac go up and down completely randomly.

Pair Corralation between Akwel SA and Bassac

Assuming the 90 days trading horizon Akwel SA is expected to under-perform the Bassac. But the stock apears to be less risky and, when comparing its historical volatility, Akwel SA is 1.21 times less risky than Bassac. The stock trades about -0.17 of its potential returns per unit of risk. The Bassac is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  4,190  in Bassac on December 5, 2024 and sell it today you would earn a total of  930.00  from holding Bassac or generate 22.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Akwel SA  vs.  Bassac

Akwel SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Akwel SA 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.

Bassac

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bassac are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bassac sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Akwel SA and Bassac

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

The idea behind Akwel SA and Bassac 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.