Correlation Between Big Camera and Begistics Public

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

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

Diversification Opportunities for Big Camera and Begistics Public

0.63

Correlation Coefficient

Big Camera  Begistics Public

Poor diversification

The 3 months correlation between Big and Begistics is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Big Camera and Begistics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Begistics Public and Big Camera 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 Big Camera are associated (or correlated) with Begistics Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Begistics Public has no effect on the direction of Big Camera i.e., Big Camera and Begistics Public go up and down completely randomly.

Pair Corralation between Big Camera and Begistics Public

Assuming the 90 days trading horizon Big Camera is expected to under-perform the Begistics Public. But the stock apears to be less risky and, when comparing its historical volatility, Big Camera is 2.65 times less risky than Begistics Public. The stock trades about -0.12 of its potential returns per unit of risk. The Begistics Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Begistics Public on October 22, 2024 and sell it today you would lose (1.00) from holding Begistics Public or give up 12.5% of portfolio value over 90 days.

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

Big Camera  vs.  Begistics Public

Big Camera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Camera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Begistics Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Begistics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Begistics Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Big Camera and Begistics Public

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

The idea behind Big Camera and Begistics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.