Correlation Between BASE and Freight Technologies

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

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

Diversification Opportunities for BASE and Freight Technologies

0.01

Correlation Coefficient

BASE  Freight Technologies

Significant diversification

The 3 months correlation between BASE and Freight is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Freight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freight Technologies 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 Freight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freight Technologies has no effect on the direction of BASE i.e., BASE and Freight Technologies go up and down completely randomly.

Pair Corralation between BASE and Freight Technologies

Assuming the 90 days horizon BASE Inc is expected to generate 1.05 times more return on investment than Freight Technologies. However, BASE is 1.05 times more volatile than Freight Technologies. It trades about 0.21 of its potential returns per unit of risk. Freight Technologies is currently generating about 0.02 per unit of risk. If you would invest  126.00  in BASE Inc on September 26, 2024 and sell it today you would earn a total of  68.00  from holding BASE Inc or generate 53.97% return on investment over 90 days.

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

BASE Inc  vs.  Freight Technologies

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) 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.

Freight Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Freight Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Freight Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BASE and Freight Technologies

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

The idea behind BASE Inc and Freight 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.