Correlation Between B Communications and Prashkovsky

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

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

Diversification Opportunities for B Communications and Prashkovsky

0.92

Correlation Coefficient

B Communications  Prashkovsky

Almost no diversification

The 3 months correlation between BCOM and Prashkovsky is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Prashkovsky in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prashkovsky 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 Prashkovsky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prashkovsky has no effect on the direction of B Communications i.e., B Communications and Prashkovsky go up and down completely randomly.

Pair Corralation between B Communications and Prashkovsky

Assuming the 90 days trading horizon B Communications is expected to generate 1.17 times more return on investment than Prashkovsky. However, B Communications is 1.17 times more volatile than Prashkovsky. It trades about 0.39 of its potential returns per unit of risk. Prashkovsky is currently generating about 0.3 per unit of risk. If you would invest  110,200  in B Communications on September 13, 2024 and sell it today you would earn a total of  66,200  from holding B Communications or generate 60.07% return on investment over 90 days.

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

B Communications  vs.  Prashkovsky

B Communications

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 30 (%) 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.

Prashkovsky

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prashkovsky are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Prashkovsky sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with B Communications and Prashkovsky

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

The idea behind B Communications and Prashkovsky 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.