Correlation Between Blackbird Plc and BASE

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

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

Diversification Opportunities for Blackbird Plc and BASE

-0.77

Correlation Coefficient

Blackbird Plc  BASE

Pay attention - limited upside

The 3 months correlation between Blackbird and BASE is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Blackbird plc and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc and Blackbird Plc 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 Blackbird plc are associated (or correlated) with BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of Blackbird Plc i.e., Blackbird Plc and BASE go up and down completely randomly.

Pair Corralation between Blackbird Plc and BASE

Assuming the 90 days horizon Blackbird plc is expected to generate 1.71 times more return on investment than BASE. However, Blackbird Plc is 1.71 times more volatile than BASE Inc. It trades about 0.13 of its potential returns per unit of risk. BASE Inc is currently generating about -0.02 per unit of risk. If you would invest  6.25  in Blackbird plc on August 31, 2024 and sell it today you would earn a total of  3.75  from holding Blackbird plc or generate 60.0% return on investment over 90 days.

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

Blackbird plc  vs.  BASE Inc

Blackbird plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackbird plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Blackbird Plc reported solid returns over the last few months and may actually be approaching a breakup point.

BASE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BASE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Blackbird Plc and BASE

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

The idea behind Blackbird plc and BASE 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.