Correlation Between Societatea Nationala and Bittnet Systems

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

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

Diversification Opportunities for Societatea Nationala and Bittnet Systems

0.33

Correlation Coefficient

Societatea Nationala  Bittnet Systems

Weak diversification

The 3 months correlation between Societatea and Bittnet is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Societatea Nationala de and Bittnet Systems SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bittnet Systems SA and Societatea Nationala 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 Societatea Nationala de are associated (or correlated) with Bittnet Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bittnet Systems SA has no effect on the direction of Societatea Nationala i.e., Societatea Nationala and Bittnet Systems go up and down completely randomly.

Pair Corralation between Societatea Nationala and Bittnet Systems

Assuming the 90 days trading horizon Societatea Nationala is expected to generate 36.96 times less return on investment than Bittnet Systems. But when comparing it to its historical volatility, Societatea Nationala de is 1.57 times less risky than Bittnet Systems. It trades about 0.02 of its potential returns per unit of risk. Bittnet Systems SA is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Bittnet Systems SA on October 25, 2024 and sell it today you would earn a total of  2.00  from holding Bittnet Systems SA or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.33%
Values	Daily Returns

Societatea Nationala de  vs.  Bittnet Systems SA

Societatea Nationala

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Societatea Nationala de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Societatea Nationala is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Bittnet Systems SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bittnet Systems SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Societatea Nationala and Bittnet Systems

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

The idea behind Societatea Nationala de and Bittnet Systems SA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.