Correlation Between BASE and Blackboxstocks

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

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

Diversification Opportunities for BASE and Blackboxstocks

-0.78

Correlation Coefficient

BASE  Blackboxstocks

Pay attention - limited upside

The 3 months correlation between BASE and Blackboxstocks is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Blackboxstocks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackboxstocks and BASE 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 BASE Inc are associated (or correlated) with Blackboxstocks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackboxstocks has no effect on the direction of BASE i.e., BASE and Blackboxstocks go up and down completely randomly.

Pair Corralation between BASE and Blackboxstocks

Assuming the 90 days horizon BASE Inc is expected to generate 0.53 times more return on investment than Blackboxstocks. However, BASE Inc is 1.9 times less risky than Blackboxstocks. It trades about 0.18 of its potential returns per unit of risk. Blackboxstocks is currently generating about -0.04 per unit of risk. If you would invest  126.00  in BASE Inc on October 15, 2024 and sell it today you would earn a total of  73.00  from holding BASE Inc or generate 57.94% return on investment over 90 days.

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

BASE Inc  vs.  Blackboxstocks

BASE Inc

Risk-Adjusted Performance

14 of 100

Good

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

Blackboxstocks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackboxstocks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BASE and Blackboxstocks

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

The idea behind BASE Inc and Blackboxstocks 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.