Correlation Between Caterpillar and Bonso Electronics
Can any of the company-specific risk be diversified away by investing in both Caterpillar 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 Caterpillar and Bonso Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Bonso Electronics International, you can compare the effects of market volatilities on Caterpillar 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 Caterpillar with a short position of Bonso Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Bonso Electronics.
Diversification Opportunities for Caterpillar and Bonso Electronics
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Bonso is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Bonso Electronics Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonso Electronics and Caterpillar 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 Caterpillar 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 Caterpillar i.e., Caterpillar and Bonso Electronics go up and down completely randomly.
Pair Corralation between Caterpillar and Bonso Electronics
If you would invest 39,061 in Caterpillar on August 27, 2024 and sell it today you would earn a total of 688.00 from holding Caterpillar or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Caterpillar vs. Bonso Electronics Internationa
Performance |
| Timeline |
| Caterpillar |
| Bonso Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Bonso Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Bonso Electronics
The main advantage of trading using opposite Caterpillar and Bonso Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar 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.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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