Correlation Between NightFood Holdings and Boardwalktech Software

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

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

Diversification Opportunities for NightFood Holdings and Boardwalktech Software

-0.64

Correlation Coefficient

NightFood Holdings  Boardwalktech Software

Excellent diversification

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

Pair Corralation between NightFood Holdings and Boardwalktech Software

Given the investment horizon of 90 days NightFood Holdings is expected to under-perform the Boardwalktech Software. But the otc stock apears to be less risky and, when comparing its historical volatility, NightFood Holdings is 1.39 times less risky than Boardwalktech Software. The otc stock trades about -0.05 of its potential returns per unit of risk. The Boardwalktech Software Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Boardwalktech Software Corp on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Boardwalktech Software Corp or generate 0.0% return on investment over 90 days.

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

NightFood Holdings  vs.  Boardwalktech Software Corp

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.

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.

Pair Trading with NightFood Holdings and Boardwalktech Software

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

The idea behind NightFood Holdings and Boardwalktech Software Corp 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.