Correlation Between Bittnet Systems and Promateris

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

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

Diversification Opportunities for Bittnet Systems and Promateris

-0.15

Correlation Coefficient

Bittnet Systems  Promateris

Good diversification

The 3 months correlation between Bittnet and Promateris is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bittnet Systems SA and Promateris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promateris SA and Bittnet Systems 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 Bittnet Systems SA are associated (or correlated) with Promateris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promateris SA has no effect on the direction of Bittnet Systems i.e., Bittnet Systems and Promateris go up and down completely randomly.

Pair Corralation between Bittnet Systems and Promateris

Assuming the 90 days trading horizon Bittnet Systems SA is expected to generate 0.38 times more return on investment than Promateris. However, Bittnet Systems SA is 2.62 times less risky than Promateris. It trades about 0.19 of its potential returns per unit of risk. Promateris SA is currently generating about -0.06 per unit of risk. If you would invest  15.00  in Bittnet Systems SA on December 24, 2024 and sell it today you would earn a total of  2.00  from holding Bittnet Systems SA or generate 13.33% return on investment over 90 days.

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

Bittnet Systems SA  vs.  Promateris SA

Bittnet Systems SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bittnet Systems SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bittnet Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Promateris SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Promateris SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bittnet Systems and Promateris

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

The idea behind Bittnet Systems SA and Promateris SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.