Correlation Between Fastly and Bonso Electronics
Can any of the company-specific risk be diversified away by investing in both Fastly 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 Fastly and Bonso Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastly Inc and Bonso Electronics International, you can compare the effects of market volatilities on Fastly 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 Fastly with a short position of Bonso Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastly and Bonso Electronics.
Diversification Opportunities for Fastly and Bonso Electronics
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fastly and Bonso is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and Bonso Electronics Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonso Electronics and Fastly 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 Fastly Inc 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 Fastly i.e., Fastly and Bonso Electronics go up and down completely randomly.
Pair Corralation between Fastly and Bonso Electronics
Given the investment horizon of 90 days Fastly is expected to generate 3.03 times less return on investment than Bonso Electronics. But when comparing it to its historical volatility, Fastly Inc is 2.43 times less risky than Bonso Electronics. It trades about 0.02 of its potential returns per unit of risk. Bonso Electronics International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 384.00 in Bonso Electronics International on October 9, 2024 and sell it today you would lose (125.00) from holding Bonso Electronics International or give up 32.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 26.06% |
| Values | Daily Returns |
Fastly Inc vs. Bonso Electronics Internationa
Performance |
| Timeline |
| Fastly Inc |
| Bonso Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fastly and Bonso Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fastly and Bonso Electronics
The main advantage of trading using opposite Fastly and Bonso Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastly 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.The idea behind Fastly Inc and Bonso Electronics International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bonso Electronics vs. Cepton Inc | Bonso Electronics vs. SaverOne 2014 Ltd | Bonso Electronics vs. Genasys | Bonso Electronics vs. Kraken Robotics |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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