Correlation Between Chroma ATE and BizLink Holding
Can any of the company-specific risk be diversified away by investing in both Chroma ATE and BizLink Holding 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 Chroma ATE and BizLink Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chroma ATE and BizLink Holding, you can compare the effects of market volatilities on Chroma ATE and BizLink Holding 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 Chroma ATE with a short position of BizLink Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chroma ATE and BizLink Holding.
Diversification Opportunities for Chroma ATE and BizLink Holding
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chroma and BizLink is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Chroma ATE and BizLink Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BizLink Holding and Chroma ATE 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 Chroma ATE are associated (or correlated) with BizLink Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BizLink Holding has no effect on the direction of Chroma ATE i.e., Chroma ATE and BizLink Holding go up and down completely randomly.
Pair Corralation between Chroma ATE and BizLink Holding
Assuming the 90 days trading horizon Chroma ATE is expected to under-perform the BizLink Holding. In addition to that, Chroma ATE is 1.06 times more volatile than BizLink Holding. It trades about -0.03 of its total potential returns per unit of risk. BizLink Holding is currently generating about 0.1 per unit of volatility. If you would invest 60,500 in BizLink Holding on November 3, 2024 and sell it today you would earn a total of 3,200 from holding BizLink Holding or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chroma ATE vs. BizLink Holding
Performance |
| Timeline |
| Chroma ATE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BizLink Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Chroma ATE and BizLink Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chroma ATE and BizLink Holding
The main advantage of trading using opposite Chroma ATE and BizLink Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chroma ATE position performs unexpectedly, BizLink Holding 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 BizLink Holding will offset losses from the drop in BizLink Holding's long position.The idea behind Chroma ATE and BizLink Holding 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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