Correlation Between Batm Advanced and L3Harris Technologies

Can any of the company-specific risk be diversified away by investing in both Batm Advanced and L3Harris Technologies 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 Batm Advanced and L3Harris Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Batm Advanced Communications and L3Harris Technologies, you can compare the effects of market volatilities on Batm Advanced and L3Harris Technologies 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 Batm Advanced with a short position of L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batm Advanced and L3Harris Technologies.

Diversification Opportunities for Batm Advanced and L3Harris Technologies

-0.08

Correlation Coefficient

Batm Advanced  L3Harris Technologies

Good diversification

The 3 months correlation between Batm and L3Harris is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Batm Advanced Communications and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies and Batm Advanced 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 Batm Advanced Communications are associated (or correlated) with L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Batm Advanced i.e., Batm Advanced and L3Harris Technologies go up and down completely randomly.

Pair Corralation between Batm Advanced and L3Harris Technologies

Assuming the 90 days trading horizon Batm Advanced Communications is expected to generate 1.9 times more return on investment than L3Harris Technologies. However, Batm Advanced is 1.9 times more volatile than L3Harris Technologies. It trades about -0.07 of its potential returns per unit of risk. L3Harris Technologies is currently generating about -0.16 per unit of risk. If you would invest  1,765  in Batm Advanced Communications on December 5, 2024 and sell it today you would lose (215.00) from holding Batm Advanced Communications or give up 12.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Batm Advanced Communications  vs.  L3Harris Technologies

Batm Advanced Commun

Risk-Adjusted Performance

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

L3Harris Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days L3Harris Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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 Batm Advanced and L3Harris Technologies

The main advantage of trading using opposite Batm Advanced and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Batm Advanced position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.

The idea behind Batm Advanced Communications and L3Harris 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.