Correlation Between Lexibook Linguistic and Bassac

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

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

Diversification Opportunities for Lexibook Linguistic and Bassac

-0.42

Correlation Coefficient

Lexibook Linguistic  Bassac

Very good diversification

The 3 months correlation between Lexibook and Bassac is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lexibook Linguistic Electronic and Bassac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassac and Lexibook Linguistic 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 Lexibook Linguistic Electronic 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 Lexibook Linguistic i.e., Lexibook Linguistic and Bassac go up and down completely randomly.

Pair Corralation between Lexibook Linguistic and Bassac

Assuming the 90 days trading horizon Lexibook Linguistic Electronic is expected to generate 1.06 times more return on investment than Bassac. However, Lexibook Linguistic is 1.06 times more volatile than Bassac. It trades about 0.12 of its potential returns per unit of risk. Bassac is currently generating about 0.0 per unit of risk. If you would invest  305.00  in Lexibook Linguistic Electronic on September 28, 2024 and sell it today you would earn a total of  95.00  from holding Lexibook Linguistic Electronic or generate 31.15% return on investment over 90 days.

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

Lexibook Linguistic Electronic  vs.  Bassac

Lexibook Linguistic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lexibook Linguistic Electronic are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Lexibook Linguistic is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Bassac

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lexibook Linguistic and Bassac

The main advantage of trading using opposite Lexibook Linguistic and Bassac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexibook Linguistic 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 Lexibook Linguistic Electronic 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.