Correlation Between Secureworks Corp and Couchbase

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

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

Diversification Opportunities for Secureworks Corp and Couchbase

-0.13

Correlation Coefficient

Secureworks Corp  Couchbase

Good diversification

The 3 months correlation between Secureworks and Couchbase is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Secureworks Corp and Couchbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Couchbase and Secureworks Corp 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 Secureworks Corp are associated (or correlated) with Couchbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Couchbase has no effect on the direction of Secureworks Corp i.e., Secureworks Corp and Couchbase go up and down completely randomly.

Pair Corralation between Secureworks Corp and Couchbase

Given the investment horizon of 90 days Secureworks Corp is expected to generate 12.94 times less return on investment than Couchbase. But when comparing it to its historical volatility, Secureworks Corp is 17.94 times less risky than Couchbase. It trades about 0.08 of its potential returns per unit of risk. Couchbase is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,649  in Couchbase on December 4, 2024 and sell it today you would earn a total of  116.00  from holding Couchbase or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.8%
Values	Daily Returns

Secureworks Corp  vs.  Couchbase

Secureworks Corp

Risk-Adjusted Performance

Modest

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

Couchbase

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Couchbase are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Couchbase may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Secureworks Corp and Couchbase

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

The idea behind Secureworks Corp and Couchbase 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.