Correlation Between Benchmark Botanics and SSIC Old

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

By analyzing existing cross correlation between Benchmark Botanics and SSIC Old, you can compare the effects of market volatilities on Benchmark Botanics and SSIC Old 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 Benchmark Botanics with a short position of SSIC Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Botanics and SSIC Old.

Diversification Opportunities for Benchmark Botanics and SSIC Old

0.0

Correlation Coefficient

Benchmark Botanics  SSIC Old

Pay attention - limited upside

The 3 months correlation between Benchmark and SSIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Botanics and SSIC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIC Old and Benchmark Botanics 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 Benchmark Botanics are associated (or correlated) with SSIC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIC Old has no effect on the direction of Benchmark Botanics i.e., Benchmark Botanics and SSIC Old go up and down completely randomly.

Pair Corralation between Benchmark Botanics and SSIC Old

Assuming the 90 days horizon Benchmark Botanics is expected to generate 13.47 times more return on investment than SSIC Old. However, Benchmark Botanics is 13.47 times more volatile than SSIC Old. It trades about 0.04 of its potential returns per unit of risk. SSIC Old is currently generating about 0.06 per unit of risk. If you would invest  1.10  in Benchmark Botanics on October 10, 2024 and sell it today you would lose (0.76) from holding Benchmark Botanics or give up 69.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.56%
Values	Daily Returns

Benchmark Botanics  vs.  SSIC Old

Benchmark Botanics

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Benchmark Botanics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Benchmark Botanics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SSIC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSIC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, SSIC Old is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Benchmark Botanics and SSIC Old

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

The idea behind Benchmark Botanics and SSIC Old 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.