Correlation Between Blackline Safety and Advanced Info

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

By analyzing existing cross correlation between Blackline Safety Corp and Advanced Info Service, you can compare the effects of market volatilities on Blackline Safety and Advanced Info 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 Blackline Safety with a short position of Advanced Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline Safety and Advanced Info.

Diversification Opportunities for Blackline Safety and Advanced Info

0.24

Correlation Coefficient

Blackline Safety  Advanced Info

Modest diversification

The 3 months correlation between Blackline and Advanced is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Blackline Safety Corp and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service and Blackline Safety 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 Blackline Safety Corp are associated (or correlated) with Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of Blackline Safety i.e., Blackline Safety and Advanced Info go up and down completely randomly.

Pair Corralation between Blackline Safety and Advanced Info

Assuming the 90 days horizon Blackline Safety Corp is expected to generate 0.44 times more return on investment than Advanced Info. However, Blackline Safety Corp is 2.3 times less risky than Advanced Info. It trades about 0.03 of its potential returns per unit of risk. Advanced Info Service is currently generating about 0.0 per unit of risk. If you would invest  440.00  in Blackline Safety Corp on December 31, 2024 and sell it today you would earn a total of  10.00  from holding Blackline Safety Corp or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.06%
Values	Daily Returns

Blackline Safety Corp  vs.  Advanced Info Service

Blackline Safety Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline Safety Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Blackline Safety is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Advanced Info Service

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Blackline Safety and Advanced Info

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

The idea behind Blackline Safety Corp and Advanced Info Service 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.