Correlation Between BASE and Imageware Sys

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

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

Diversification Opportunities for BASE and Imageware Sys

0.2

Correlation Coefficient

BASE  Imageware Sys

Modest diversification

The 3 months correlation between BASE and Imageware is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Imageware Sys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imageware Sys 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 Imageware Sys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imageware Sys has no effect on the direction of BASE i.e., BASE and Imageware Sys go up and down completely randomly.

Pair Corralation between BASE and Imageware Sys

If you would invest  0.10  in Imageware Sys on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Imageware Sys or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

BASE Inc  vs.  Imageware Sys

BASE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BASE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Imageware Sys

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BASE and Imageware Sys

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

The idea behind BASE Inc and Imageware Sys 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.