Correlation Between BHPA and Imageware Sys

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

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

Diversification Opportunities for BHPA and Imageware Sys

0.05

Correlation Coefficient

BHPA  Imageware Sys

Significant diversification

The 3 months correlation between BHPA and Imageware is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BHPA Inc and Imageware Sys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imageware Sys and BHPA 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 BHPA Inc are associated (or correlated) with Imageware Sys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imageware Sys has no effect on the direction of BHPA i.e., BHPA and Imageware Sys go up and down completely randomly.

Pair Corralation between BHPA and Imageware Sys

If you would invest  0.40  in BHPA Inc on September 3, 2024 and sell it today you would earn a total of  0.10  from holding BHPA Inc or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

BHPA Inc  vs.  Imageware Sys

BHPA Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BHPA Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, BHPA sustained solid returns over the last few months and may actually be approaching a breakup point.

Imageware Sys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imageware Sys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Imageware Sys is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BHPA and Imageware Sys

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

The idea behind BHPA Inc and Imageware Sys 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .