Correlation Between BASE and Versus Systems

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

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

Diversification Opportunities for BASE and Versus Systems

-0.17

Correlation Coefficient

BASE  Versus Systems

Good diversification

The 3 months correlation between BASE and Versus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Versus Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Versus Systems 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 Versus Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Versus Systems has no effect on the direction of BASE i.e., BASE and Versus Systems go up and down completely randomly.

Pair Corralation between BASE and Versus Systems

Assuming the 90 days horizon BASE Inc is expected to generate 0.94 times more return on investment than Versus Systems. However, BASE Inc is 1.06 times less risky than Versus Systems. It trades about 0.25 of its potential returns per unit of risk. Versus Systems is currently generating about 0.14 per unit of risk. If you would invest  150.00  in BASE Inc on October 15, 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	94.74%
Values	Daily Returns

BASE Inc  vs.  Versus Systems

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.

Versus Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Versus Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Versus Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BASE and Versus Systems

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

The idea behind BASE Inc and Versus Systems 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.