Correlation Between BigBearai Holdings and Shimano

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

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

Diversification Opportunities for BigBearai Holdings and Shimano

-0.19

Correlation Coefficient

BigBearai Holdings  Shimano

Good diversification

The 3 months correlation between BigBearai and Shimano is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BigBearai Holdings and Shimano Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano Inc ADR and BigBearai Holdings 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 BigBearai Holdings are associated (or correlated) with Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano Inc ADR has no effect on the direction of BigBearai Holdings i.e., BigBearai Holdings and Shimano go up and down completely randomly.

Pair Corralation between BigBearai Holdings and Shimano

Given the investment horizon of 90 days BigBearai Holdings is expected to generate 6.58 times more return on investment than Shimano. However, BigBearai Holdings is 6.58 times more volatile than Shimano Inc ADR. It trades about 0.04 of its potential returns per unit of risk. Shimano Inc ADR is currently generating about 0.1 per unit of risk. If you would invest  373.00  in BigBearai Holdings on December 24, 2024 and sell it today you would lose (25.00) from holding BigBearai Holdings or give up 6.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

BigBearai Holdings  vs.  Shimano Inc ADR

BigBearai Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BigBearai Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, BigBearai Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Shimano Inc ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shimano Inc ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Shimano may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BigBearai Holdings and Shimano

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

The idea behind BigBearai Holdings and Shimano Inc ADR 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.