Correlation Between BEC World and AddTech Hub

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

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

Diversification Opportunities for BEC World and AddTech Hub

0.53

Correlation Coefficient

BEC World  AddTech Hub

Very weak diversification

The 3 months correlation between BEC and AddTech is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BEC World Public and AddTech Hub Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddTech Hub Public and BEC World 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 BEC World Public are associated (or correlated) with AddTech Hub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddTech Hub Public has no effect on the direction of BEC World i.e., BEC World and AddTech Hub go up and down completely randomly.

Pair Corralation between BEC World and AddTech Hub

Assuming the 90 days trading horizon BEC World Public is expected to under-perform the AddTech Hub. But the stock apears to be less risky and, when comparing its historical volatility, BEC World Public is 1.68 times less risky than AddTech Hub. The stock trades about -0.07 of its potential returns per unit of risk. The AddTech Hub Public is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  458.00  in AddTech Hub Public on September 26, 2024 and sell it today you would earn a total of  52.00  from holding AddTech Hub Public or generate 11.35% return on investment over 90 days.

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

BEC World Public  vs.  AddTech Hub Public

BEC World Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEC World Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

AddTech Hub Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AddTech Hub Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, AddTech Hub may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BEC World and AddTech Hub

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

The idea behind BEC World Public and AddTech Hub Public 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.