Correlation Between Boardwalktech Software and NightFood Holdings

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

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

Diversification Opportunities for Boardwalktech Software and NightFood Holdings

-0.64

Correlation Coefficient

Boardwalktech Software  NightFood Holdings

Excellent diversification

The 3 months correlation between Boardwalktech and NightFood is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Boardwalktech Software Corp and NightFood Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NightFood Holdings and Boardwalktech Software 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 Boardwalktech Software Corp are associated (or correlated) with NightFood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NightFood Holdings has no effect on the direction of Boardwalktech Software i.e., Boardwalktech Software and NightFood Holdings go up and down completely randomly.

Pair Corralation between Boardwalktech Software and NightFood Holdings

Assuming the 90 days horizon Boardwalktech Software Corp is expected to under-perform the NightFood Holdings. But the otc stock apears to be less risky and, when comparing its historical volatility, Boardwalktech Software Corp is 2.05 times less risky than NightFood Holdings. The otc stock trades about -0.03 of its potential returns per unit of risk. The NightFood Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.80  in NightFood Holdings on September 12, 2024 and sell it today you would lose (0.63) from holding NightFood Holdings or give up 35.0% of portfolio value over 90 days.

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

Boardwalktech Software Corp  vs.  NightFood Holdings

Boardwalktech Software

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boardwalktech Software Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Boardwalktech Software reported solid returns over the last few months and may actually be approaching a breakup point.

NightFood Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NightFood Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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 Boardwalktech Software and NightFood Holdings

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

The idea behind Boardwalktech Software Corp and NightFood 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.