Correlation Between Aware and BASE
Can any of the company-specific risk be diversified away by investing in both Aware and BASE 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 Aware and BASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aware Inc and BASE Inc, you can compare the effects of market volatilities on Aware and BASE 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 Aware with a short position of BASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aware and BASE.
Diversification Opportunities for Aware and BASE
Average diversification
The 3 months correlation between Aware and BASE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc and Aware 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 Aware Inc are associated (or correlated) with BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of Aware i.e., Aware and BASE go up and down completely randomly.
Pair Corralation between Aware and BASE
Given the investment horizon of 90 days Aware is expected to generate 10.12 times less return on investment than BASE. But when comparing it to its historical volatility, Aware Inc is 1.15 times less risky than BASE. It trades about 0.02 of its potential returns per unit of risk. BASE Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 128.00 in BASE Inc on September 1, 2024 and sell it today you would earn a total of 22.00 from holding BASE Inc or generate 17.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aware Inc vs. BASE Inc
Performance |
| Timeline |
| Aware Inc |
| BASE Inc |
Aware and BASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aware and BASE
The main advantage of trading using opposite Aware and BASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aware position performs unexpectedly, BASE 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 BASE will offset losses from the drop in BASE's long position.| Aware vs. Xcelmobility | Aware vs. Pushfor Investments | Aware vs. CurrentC Power | Aware vs. Agent Information Software |
| BASE vs. CurrentC Power | BASE vs. Agent Information Software | BASE vs. Maxwell Resource | BASE vs. Ackroo Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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