Correlation Between Arts Way and Bonso Electronics
Can any of the company-specific risk be diversified away by investing in both Arts Way and Bonso Electronics 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 Arts Way and Bonso Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arts Way Manufacturing Co and Bonso Electronics International, you can compare the effects of market volatilities on Arts Way and Bonso Electronics 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 Arts Way with a short position of Bonso Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arts Way and Bonso Electronics.
Diversification Opportunities for Arts Way and Bonso Electronics
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arts and Bonso is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Arts Way Manufacturing Co and Bonso Electronics Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonso Electronics and Arts Way 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 Arts Way Manufacturing Co are associated (or correlated) with Bonso Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonso Electronics has no effect on the direction of Arts Way i.e., Arts Way and Bonso Electronics go up and down completely randomly.
Pair Corralation between Arts Way and Bonso Electronics
Given the investment horizon of 90 days Arts Way Manufacturing Co is expected to generate 3.82 times more return on investment than Bonso Electronics. However, Arts Way is 3.82 times more volatile than Bonso Electronics International. It trades about 0.04 of its potential returns per unit of risk. Bonso Electronics International is currently generating about 0.03 per unit of risk. If you would invest 240.00 in Arts Way Manufacturing Co on October 20, 2024 and sell it today you would lose (59.00) from holding Arts Way Manufacturing Co or give up 24.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 24.44% |
| Values | Daily Returns |
Arts Way Manufacturing Co vs. Bonso Electronics Internationa
Performance |
| Timeline |
| Arts Way Manufacturing |
| Bonso Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Arts Way and Bonso Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arts Way and Bonso Electronics
The main advantage of trading using opposite Arts Way and Bonso Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arts Way position performs unexpectedly, Bonso Electronics 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 Bonso Electronics will offset losses from the drop in Bonso Electronics' long position.| Arts Way vs. First Tractor | Arts Way vs. Ag Growth International | Arts Way vs. AmeraMex International | Arts Way vs. American Premium Water |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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