Correlation Between BlackBerry and A10 Network

Can any of the company-specific risk be diversified away by investing in both BlackBerry and A10 Network 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 BlackBerry and A10 Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackBerry and A10 Network, you can compare the effects of market volatilities on BlackBerry and A10 Network 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 BlackBerry with a short position of A10 Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackBerry and A10 Network.

Diversification Opportunities for BlackBerry and A10 Network

0.7

Correlation Coefficient

BlackBerry  A10 Network

Poor diversification

The 3 months correlation between BlackBerry and A10 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BlackBerry and A10 Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A10 Network and BlackBerry 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 BlackBerry are associated (or correlated) with A10 Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A10 Network has no effect on the direction of BlackBerry i.e., BlackBerry and A10 Network go up and down completely randomly.

Pair Corralation between BlackBerry and A10 Network

Allowing for the 90-day total investment horizon BlackBerry is expected to generate 5.16 times more return on investment than A10 Network. However, BlackBerry is 5.16 times more volatile than A10 Network. It trades about 0.27 of its potential returns per unit of risk. A10 Network is currently generating about -0.01 per unit of risk. If you would invest  294.00  in BlackBerry on October 9, 2024 and sell it today you would earn a total of  115.00  from holding BlackBerry or generate 39.12% return on investment over 90 days.

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

BlackBerry  vs.  A10 Network

BlackBerry

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackBerry are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, BlackBerry sustained solid returns over the last few months and may actually be approaching a breakup point.

A10 Network

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A10 Network are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, A10 Network displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackBerry and A10 Network

The main advantage of trading using opposite BlackBerry and A10 Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackBerry position performs unexpectedly, A10 Network 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 A10 Network will offset losses from the drop in A10 Network's long position.

The idea behind BlackBerry and A10 Network 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .