Correlation Between Bowmo and AirIQ

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

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

Diversification Opportunities for Bowmo and AirIQ

0.69

Correlation Coefficient

Bowmo  AirIQ

Poor diversification

The 3 months correlation between Bowmo and AirIQ is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bowmo Inc and AirIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirIQ Inc and Bowmo 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 Bowmo Inc are associated (or correlated) with AirIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirIQ Inc has no effect on the direction of Bowmo i.e., Bowmo and AirIQ go up and down completely randomly.

Pair Corralation between Bowmo and AirIQ

Given the investment horizon of 90 days Bowmo Inc is expected to generate 5.88 times more return on investment than AirIQ. However, Bowmo is 5.88 times more volatile than AirIQ Inc. It trades about 0.04 of its potential returns per unit of risk. AirIQ Inc is currently generating about -0.05 per unit of risk. If you would invest  0.06  in Bowmo Inc on December 27, 2024 and sell it today you would lose (0.05) from holding Bowmo Inc or give up 83.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Bowmo Inc  vs.  AirIQ Inc

Bowmo Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bowmo Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Bowmo displayed solid returns over the last few months and may actually be approaching a breakup point.

AirIQ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days AirIQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bowmo and AirIQ

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

The idea behind Bowmo Inc and AirIQ Inc 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.