Correlation Between B Communications and One Software

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

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

Diversification Opportunities for B Communications and One Software

0.32

Correlation Coefficient

B Communications  One Software

Weak diversification

The 3 months correlation between BCOM and One is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and One Software Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Software Technologies and B Communications 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 B Communications are associated (or correlated) with One Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Software Technologies has no effect on the direction of B Communications i.e., B Communications and One Software go up and down completely randomly.

Pair Corralation between B Communications and One Software

Assuming the 90 days trading horizon B Communications is expected to generate 1.27 times more return on investment than One Software. However, B Communications is 1.27 times more volatile than One Software Technologies. It trades about 0.11 of its potential returns per unit of risk. One Software Technologies is currently generating about 0.02 per unit of risk. If you would invest  166,800  in B Communications on December 29, 2024 and sell it today you would earn a total of  24,400  from holding B Communications or generate 14.63% return on investment over 90 days.

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

B Communications  vs.  One Software Technologies

B Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

One Software Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in One Software Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, One Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with B Communications and One Software

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

The idea behind B Communications and One Software Technologies 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.