Correlation Between 51Talk Online and BAKER

Can any of the company-specific risk be diversified away by investing in both 51Talk Online and BAKER 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 51Talk Online and BAKER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 51Talk Online Education and BAKER HUGHES A, you can compare the effects of market volatilities on 51Talk Online and BAKER 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 51Talk Online with a short position of BAKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of 51Talk Online and BAKER.

Diversification Opportunities for 51Talk Online and BAKER

-0.4

Correlation Coefficient

51Talk Online  BAKER

Very good diversification

The 3 months correlation between 51Talk and BAKER is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding 51Talk Online Education and BAKER HUGHES A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAKER HUGHES A and 51Talk Online 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 51Talk Online Education are associated (or correlated) with BAKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAKER HUGHES A has no effect on the direction of 51Talk Online i.e., 51Talk Online and BAKER go up and down completely randomly.

Pair Corralation between 51Talk Online and BAKER

Considering the 90-day investment horizon 51Talk Online is expected to generate 6.61 times less return on investment than BAKER. But when comparing it to its historical volatility, 51Talk Online Education is 12.04 times less risky than BAKER. It trades about 0.08 of its potential returns per unit of risk. BAKER HUGHES A is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,156  in BAKER HUGHES A on October 5, 2024 and sell it today you would earn a total of  65.00  from holding BAKER HUGHES A or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.29%
Values	Daily Returns

51Talk Online Education  vs.  BAKER HUGHES A

51Talk Online Education

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, 51Talk Online exhibited solid returns over the last few months and may actually be approaching a breakup point.

BAKER HUGHES A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAKER HUGHES A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAKER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 51Talk Online and BAKER

The main advantage of trading using opposite 51Talk Online and BAKER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 51Talk Online position performs unexpectedly, BAKER 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 BAKER will offset losses from the drop in BAKER's long position.

The idea behind 51Talk Online Education and BAKER HUGHES A 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.