Correlation Between Butler National and New Ulm

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

By analyzing existing cross correlation between Butler National Corp and New Ulm Telecom, you can compare the effects of market volatilities on Butler National and New Ulm 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 Butler National with a short position of New Ulm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butler National and New Ulm.

Diversification Opportunities for Butler National and New Ulm

-0.53

Correlation Coefficient

Butler National  New Ulm

Excellent diversification

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

Pair Corralation between Butler National and New Ulm

Given the investment horizon of 90 days Butler National Corp is expected to under-perform the New Ulm. But the otc stock apears to be less risky and, when comparing its historical volatility, Butler National Corp is 1.34 times less risky than New Ulm. The otc stock trades about -0.03 of its potential returns per unit of risk. The New Ulm Telecom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,044  in New Ulm Telecom on December 27, 2024 and sell it today you would earn a total of  66.00  from holding New Ulm Telecom or generate 6.32% return on investment over 90 days.

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

Butler National Corp  vs.  New Ulm Telecom

Butler National Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Butler National Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Butler National is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

New Ulm Telecom

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Ulm Telecom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, New Ulm may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Butler National and New Ulm

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

The idea behind Butler National Corp and New Ulm Telecom 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.