Correlation Between BASE and Paltalk

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

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

Diversification Opportunities for BASE and Paltalk

-0.18

Correlation Coefficient

BASE  Paltalk

Good diversification

The 3 months correlation between BASE and Paltalk is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Paltalk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paltalk 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 Paltalk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paltalk has no effect on the direction of BASE i.e., BASE and Paltalk go up and down completely randomly.

Pair Corralation between BASE and Paltalk

Assuming the 90 days horizon BASE Inc is expected to generate 0.89 times more return on investment than Paltalk. However, BASE Inc is 1.13 times less risky than Paltalk. It trades about 0.25 of its potential returns per unit of risk. Paltalk is currently generating about 0.08 per unit of risk. If you would invest  150.00  in BASE Inc on October 13, 2024 and sell it today you would earn a total of  49.00  from holding BASE Inc or generate 32.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.0%
Values	Daily Returns

BASE Inc  vs.  Paltalk

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.

Paltalk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paltalk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BASE and Paltalk

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

The idea behind BASE Inc and Paltalk 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.