Correlation Between Bentley Systems and Liquid Avatar

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

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

Diversification Opportunities for Bentley Systems and Liquid Avatar

0.53

Correlation Coefficient

Bentley Systems  Liquid Avatar

Very weak diversification

The 3 months correlation between Bentley and Liquid is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bentley Systems and Liquid Avatar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquid Avatar Techno and Bentley 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 Bentley Systems are associated (or correlated) with Liquid Avatar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquid Avatar Techno has no effect on the direction of Bentley Systems i.e., Bentley Systems and Liquid Avatar go up and down completely randomly.

Pair Corralation between Bentley Systems and Liquid Avatar

Considering the 90-day investment horizon Bentley Systems is expected to generate 0.2 times more return on investment than Liquid Avatar. However, Bentley Systems is 5.08 times less risky than Liquid Avatar. It trades about -0.01 of its potential returns per unit of risk. Liquid Avatar Technologies is currently generating about -0.09 per unit of risk. If you would invest  5,025  in Bentley Systems on September 22, 2024 and sell it today you would lose (211.00) from holding Bentley Systems or give up 4.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

Bentley Systems  vs.  Liquid Avatar Technologies

Bentley Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

Liquid Avatar Techno

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bentley Systems and Liquid Avatar

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

The idea behind Bentley Systems and Liquid Avatar Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.