Correlation Between Mono Next and BEC World

Can any of the company-specific risk be diversified away by investing in both Mono Next and BEC World 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 Mono Next and BEC World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mono Next Public and BEC World Public, you can compare the effects of market volatilities on Mono Next and BEC World 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 Mono Next with a short position of BEC World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mono Next and BEC World.

Diversification Opportunities for Mono Next and BEC World

0.02

Correlation Coefficient

Mono Next  BEC World

Significant diversification

The 3 months correlation between Mono and BEC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mono Next Public and BEC World Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEC World Public and Mono Next 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 Mono Next Public are associated (or correlated) with BEC World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEC World Public has no effect on the direction of Mono Next i.e., Mono Next and BEC World go up and down completely randomly.

Pair Corralation between Mono Next and BEC World

Assuming the 90 days trading horizon Mono Next Public is expected to under-perform the BEC World. In addition to that, Mono Next is 3.27 times more volatile than BEC World Public. It trades about -0.26 of its total potential returns per unit of risk. BEC World Public is currently generating about -0.06 per unit of volatility. If you would invest  406.00  in BEC World Public on December 4, 2024 and sell it today you would lose (24.00) from holding BEC World Public or give up 5.91% of portfolio value over 90 days.

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

Mono Next Public  vs.  BEC World Public

Mono Next Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mono Next Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BEC World Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days BEC World Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, BEC World is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Mono Next and BEC World

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

The idea behind Mono Next Public and BEC World Public 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.