Correlation Between Boxlight Corp and Barloworld

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

By analyzing existing cross correlation between Boxlight Corp Class and Barloworld Ltd ADR, you can compare the effects of market volatilities on Boxlight Corp and Barloworld 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 Boxlight Corp with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boxlight Corp and Barloworld.

Diversification Opportunities for Boxlight Corp and Barloworld

0.65

Correlation Coefficient

Boxlight Corp  Barloworld

Poor diversification

The 3 months correlation between Boxlight and Barloworld is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Boxlight Corp Class and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Boxlight Corp 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 Boxlight Corp Class are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Boxlight Corp i.e., Boxlight Corp and Barloworld go up and down completely randomly.

Pair Corralation between Boxlight Corp and Barloworld

Given the investment horizon of 90 days Boxlight Corp Class is expected to generate 8.85 times more return on investment than Barloworld. However, Boxlight Corp is 8.85 times more volatile than Barloworld Ltd ADR. It trades about 0.07 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about -0.02 per unit of risk. If you would invest  182.00  in Boxlight Corp Class on December 25, 2024 and sell it today you would lose (21.00) from holding Boxlight Corp Class or give up 11.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Boxlight Corp Class  vs.  Barloworld Ltd ADR

Boxlight Corp Class

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boxlight Corp Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Boxlight Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Barloworld ADR

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Boxlight Corp and Barloworld

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

The idea behind Boxlight Corp Class and Barloworld Ltd ADR 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.