Correlation Between Secure Energy and Baylin Technologies

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

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

Diversification Opportunities for Secure Energy and Baylin Technologies

0.5

Correlation Coefficient

Secure Energy  Baylin Technologies

Very weak diversification

The 3 months correlation between Secure and Baylin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and Secure Energy 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 Secure Energy Services are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of Secure Energy i.e., Secure Energy and Baylin Technologies go up and down completely randomly.

Pair Corralation between Secure Energy and Baylin Technologies

Assuming the 90 days trading horizon Secure Energy is expected to generate 1.95 times less return on investment than Baylin Technologies. But when comparing it to its historical volatility, Secure Energy Services is 3.36 times less risky than Baylin Technologies. It trades about 0.23 of its potential returns per unit of risk. Baylin Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Baylin Technologies on August 31, 2024 and sell it today you would earn a total of  14.00  from holding Baylin Technologies or generate 53.85% return on investment over 90 days.

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

Secure Energy Services  vs.  Baylin Technologies

Secure Energy Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Secure Energy Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Secure Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Baylin Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baylin Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Baylin Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Secure Energy and Baylin Technologies

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

The idea behind Secure Energy Services and Baylin Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.