Correlation Between Travelers Companies and Bonso Electronics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Travelers Companies 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 Travelers Companies and Bonso Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and Bonso Electronics International, you can compare the effects of market volatilities on Travelers Companies 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 Travelers Companies with a short position of Bonso Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Bonso Electronics.

Diversification Opportunities for Travelers Companies and Bonso Electronics

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Travelers and Bonso is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Bonso Electronics Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonso Electronics and Travelers Companies 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 The Travelers Companies 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 Travelers Companies i.e., Travelers Companies and Bonso Electronics go up and down completely randomly.

Pair Corralation between Travelers Companies and Bonso Electronics

Considering the 90-day investment horizon Travelers Companies is expected to generate 4.83 times less return on investment than Bonso Electronics. But when comparing it to its historical volatility, The Travelers Companies is 8.78 times less risky than Bonso Electronics. It trades about 0.07 of its potential returns per unit of risk. Bonso Electronics International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Bonso Electronics International on August 27, 2024 and sell it today you would lose (81.00) from holding Bonso Electronics International or give up 23.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy25.49%
ValuesDaily Returns

The Travelers Companies  vs.  Bonso Electronics Internationa

 Performance 
       Timeline  
The Travelers Companies 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.
Bonso Electronics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bonso Electronics International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bonso Electronics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Travelers Companies and Bonso Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Travelers Companies and Bonso Electronics

The main advantage of trading using opposite Travelers Companies and Bonso Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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 The Travelers Companies 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

Other Complementary Tools

Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios