Correlation Between B Communications and Buff Technologies
Can any of the company-specific risk be diversified away by investing in both B Communications and Buff Technologies 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 B Communications and Buff Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Buff Technologies, you can compare the effects of market volatilities on B Communications and Buff Technologies 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 B Communications with a short position of Buff Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Buff Technologies.
Diversification Opportunities for B Communications and Buff Technologies
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BCOM and Buff is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Buff Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buff Technologies and B Communications 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 B Communications are associated (or correlated) with Buff Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buff Technologies has no effect on the direction of B Communications i.e., B Communications and Buff Technologies go up and down completely randomly.
Pair Corralation between B Communications and Buff Technologies
Assuming the 90 days trading horizon B Communications is expected to generate 1.74 times more return on investment than Buff Technologies. However, B Communications is 1.74 times more volatile than Buff Technologies. It trades about 0.38 of its potential returns per unit of risk. Buff Technologies is currently generating about -0.46 per unit of risk. If you would invest 131,200 in B Communications on August 30, 2024 and sell it today you would earn a total of 36,800 from holding B Communications or generate 28.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
B Communications vs. Buff Technologies
Performance |
| Timeline |
| B Communications |
| Buff Technologies |
B Communications and Buff Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Buff Technologies
The main advantage of trading using opposite B Communications and Buff Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Buff Technologies 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 Buff Technologies will offset losses from the drop in Buff Technologies' long position.| B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Holmes Place International | B Communications vs. Nova |
| Buff Technologies vs. Opal Balance | Buff Technologies vs. B Communications | Buff Technologies vs. Holmes Place International | Buff Technologies vs. Nova |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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