Correlation Between Manitou BF and Bassac

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

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

Diversification Opportunities for Manitou BF and Bassac

0.26

Correlation Coefficient

Manitou BF  Bassac

Modest diversification

The 3 months correlation between Manitou and Bassac is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Bassac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassac and Manitou BF 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 Manitou BF SA are associated (or correlated) with Bassac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassac has no effect on the direction of Manitou BF i.e., Manitou BF and Bassac go up and down completely randomly.

Pair Corralation between Manitou BF and Bassac

Assuming the 90 days trading horizon Manitou BF SA is expected to under-perform the Bassac. In addition to that, Manitou BF is 1.03 times more volatile than Bassac. It trades about -0.12 of its total potential returns per unit of risk. Bassac is currently generating about 0.0 per unit of volatility. If you would invest  4,450  in Bassac on September 28, 2024 and sell it today you would lose (130.00) from holding Bassac or give up 2.92% of portfolio value over 90 days.

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

Manitou BF SA  vs.  Bassac

Manitou BF SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bassac

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Manitou BF and Bassac

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

The idea behind Manitou BF SA and Bassac 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.