Correlation Between Bravura Solutions and Bluebet Holdings

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

By analyzing existing cross correlation between Bravura Solutions and Bluebet Holdings, you can compare the effects of market volatilities on Bravura Solutions and Bluebet Holdings 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 Bravura Solutions with a short position of Bluebet Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bravura Solutions and Bluebet Holdings.

Diversification Opportunities for Bravura Solutions and Bluebet Holdings

0.84

Correlation Coefficient

Bravura Solutions  Bluebet Holdings

Very poor diversification

The 3 months correlation between Bravura and Bluebet is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bravura Solutions and Bluebet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluebet Holdings and Bravura Solutions 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 Bravura Solutions are associated (or correlated) with Bluebet Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluebet Holdings has no effect on the direction of Bravura Solutions i.e., Bravura Solutions and Bluebet Holdings go up and down completely randomly.

Pair Corralation between Bravura Solutions and Bluebet Holdings

Assuming the 90 days trading horizon Bravura Solutions is expected to generate 0.83 times more return on investment than Bluebet Holdings. However, Bravura Solutions is 1.21 times less risky than Bluebet Holdings. It trades about 0.07 of its potential returns per unit of risk. Bluebet Holdings is currently generating about 0.03 per unit of risk. If you would invest  74.00  in Bravura Solutions on October 3, 2024 and sell it today you would earn a total of  151.00  from holding Bravura Solutions or generate 204.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Bravura Solutions  vs.  Bluebet Holdings

Bravura Solutions

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bravura Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bravura Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bluebet Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bluebet Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bluebet Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bravura Solutions and Bluebet Holdings

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

The idea behind Bravura Solutions and Bluebet Holdings 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.