Correlation Between ServiceNow and BC Technology

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

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

Diversification Opportunities for ServiceNow and BC Technology

0.12

Correlation Coefficient

ServiceNow  BC Technology

Average diversification

The 3 months correlation between ServiceNow and BCTCF is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and BC Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Technology Group and ServiceNow 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 ServiceNow are associated (or correlated) with BC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Technology Group has no effect on the direction of ServiceNow i.e., ServiceNow and BC Technology go up and down completely randomly.

Pair Corralation between ServiceNow and BC Technology

Considering the 90-day investment horizon ServiceNow is expected to under-perform the BC Technology. But the stock apears to be less risky and, when comparing its historical volatility, ServiceNow is 1.38 times less risky than BC Technology. The stock trades about -0.16 of its potential returns per unit of risk. The BC Technology Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  107.00  in BC Technology Group on December 22, 2024 and sell it today you would lose (7.00) from holding BC Technology Group or give up 6.54% of portfolio value over 90 days.

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

ServiceNow  vs.  BC Technology Group

ServiceNow

Risk-Adjusted Performance

Very Weak

Over the last 90 days ServiceNow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

BC Technology Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days BC Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, BC Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ServiceNow and BC Technology

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

The idea behind ServiceNow and BC Technology Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.