Correlation Between Cistera Networks and BBB Foods

Can any of the company-specific risk be diversified away by investing in both Cistera Networks and BBB Foods 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 Cistera Networks and BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cistera Networks and BBB Foods

0.0

Correlation Coefficient

Cistera Networks  BBB Foods

Pay attention - limited upside

The 3 months correlation between Cistera and BBB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cistera Networks and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and Cistera Networks 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 Cistera Networks are associated (or correlated) with BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Cistera Networks i.e., Cistera Networks and BBB Foods go up and down completely randomly.

Pair Corralation between Cistera Networks and BBB Foods

Given the investment horizon of 90 days Cistera Networks is expected to generate 22.22 times more return on investment than BBB Foods. However, Cistera Networks is 22.22 times more volatile than BBB Foods. It trades about 0.06 of its potential returns per unit of risk. BBB Foods is currently generating about 0.09 per unit of risk. If you would invest  0.02  in Cistera Networks on October 11, 2024 and sell it today you would lose (0.01) from holding Cistera Networks or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	52.62%
Values	Daily Returns

Cistera Networks  vs.  BBB Foods

Cistera Networks

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Cistera Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cistera Networks is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BBB Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cistera Networks and BBB Foods

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

The idea behind Cistera Networks and BBB Foods 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.