Correlation Between BASE and MMTEC

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

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

Diversification Opportunities for BASE and MMTEC

-0.11

Correlation Coefficient

BASE  MMTEC

Good diversification

The 3 months correlation between BASE and MMTEC is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and MMTEC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMTEC Inc 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 MMTEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMTEC Inc has no effect on the direction of BASE i.e., BASE and MMTEC go up and down completely randomly.

Pair Corralation between BASE and MMTEC

Assuming the 90 days horizon BASE Inc is expected to generate 0.42 times more return on investment than MMTEC. However, BASE Inc is 2.41 times less risky than MMTEC. It trades about 0.05 of its potential returns per unit of risk. MMTEC Inc is currently generating about -0.03 per unit of risk. If you would invest  170.00  in BASE Inc on September 27, 2024 and sell it today you would earn a total of  24.00  from holding BASE Inc or generate 14.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

BASE Inc  vs.  MMTEC Inc

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 abnormal basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

MMTEC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MMTEC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BASE and MMTEC

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

The idea behind BASE Inc and MMTEC Inc 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.