Correlation Between Savoreat and B Communications

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

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

Diversification Opportunities for Savoreat and B Communications

-0.51

Correlation Coefficient

Savoreat  B Communications

Excellent diversification

The 3 months correlation between Savoreat and BCOM is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Savoreat and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Savoreat 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 Savoreat are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Savoreat i.e., Savoreat and B Communications go up and down completely randomly.

Pair Corralation between Savoreat and B Communications

Assuming the 90 days trading horizon Savoreat is expected to under-perform the B Communications. In addition to that, Savoreat is 1.56 times more volatile than B Communications. It trades about -0.17 of its total potential returns per unit of risk. B Communications is currently generating about 0.36 per unit of volatility. If you would invest  151,300  in B Communications on September 12, 2024 and sell it today you would earn a total of  26,100  from holding B Communications or generate 17.25% return on investment over 90 days.

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

Savoreat  vs.  B Communications

Savoreat

Risk-Adjusted Performance

0 of 100

Very Weak

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

B Communications

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Savoreat and B Communications

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

The idea behind Savoreat and B Communications 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.