Correlation Between BIO Key and Arco Platform
Can any of the company-specific risk be diversified away by investing in both BIO Key and Arco Platform 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 BIO Key and Arco Platform into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BIO Key International and Arco Platform, you can compare the effects of market volatilities on BIO Key and Arco Platform 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 BIO Key with a short position of Arco Platform. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIO Key and Arco Platform.
Diversification Opportunities for BIO Key and Arco Platform
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BIO and Arco is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BIO Key International and Arco Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arco Platform and BIO Key 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 BIO Key International are associated (or correlated) with Arco Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arco Platform has no effect on the direction of BIO Key i.e., BIO Key and Arco Platform go up and down completely randomly.
Pair Corralation between BIO Key and Arco Platform
Given the investment horizon of 90 days BIO Key International is expected to under-perform the Arco Platform. In addition to that, BIO Key is 4.03 times more volatile than Arco Platform. It trades about -0.01 of its total potential returns per unit of risk. Arco Platform is currently generating about 0.02 per unit of volatility. If you would invest 1,253 in Arco Platform on November 1, 2024 and sell it today you would earn a total of 34.00 from holding Arco Platform or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 19.62% |
| Values | Daily Returns |
BIO Key International vs. Arco Platform
Performance |
| Timeline |
| BIO Key International |
| Arco Platform |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BIO Key and Arco Platform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BIO Key and Arco Platform
The main advantage of trading using opposite BIO Key and Arco Platform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BIO Key position performs unexpectedly, Arco Platform 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 Arco Platform will offset losses from the drop in Arco Platform's long position.| BIO Key vs. LogicMark | BIO Key vs. SSC Security Services | BIO Key vs. ICTS International NV | BIO Key vs. Senstar Technologies |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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