Correlation Between BOS Better and Universal Security

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

By analyzing existing cross correlation between BOS Better Online and Universal Security Instruments, you can compare the effects of market volatilities on BOS Better and Universal Security 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 BOS Better with a short position of Universal Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and Universal Security.

Diversification Opportunities for BOS Better and Universal Security

-0.48

Correlation Coefficient

BOS Better  Universal Security

Very good diversification

The 3 months correlation between BOS and Universal is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and Universal Security Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Security and BOS Better 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 BOS Better Online are associated (or correlated) with Universal Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Security has no effect on the direction of BOS Better i.e., BOS Better and Universal Security go up and down completely randomly.

Pair Corralation between BOS Better and Universal Security

Given the investment horizon of 90 days BOS Better Online is expected to generate 1.56 times more return on investment than Universal Security. However, BOS Better is 1.56 times more volatile than Universal Security Instruments. It trades about 0.1 of its potential returns per unit of risk. Universal Security Instruments is currently generating about -0.13 per unit of risk. If you would invest  327.00  in BOS Better Online on December 19, 2024 and sell it today you would earn a total of  59.00  from holding BOS Better Online or generate 18.04% return on investment over 90 days.

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

BOS Better Online  vs.  Universal Security Instruments

BOS Better Online

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BOS Better exhibited solid returns over the last few months and may actually be approaching a breakup point.

Universal Security

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Security Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BOS Better and Universal Security

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

The idea behind BOS Better Online and Universal Security Instruments 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.