Correlation Between AST SpaceMobile and BASF SE

Can any of the company-specific risk be diversified away by investing in both AST SpaceMobile and BASF SE 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 AST SpaceMobile and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AST SpaceMobile and BASF SE ADR, you can compare the effects of market volatilities on AST SpaceMobile and BASF SE 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 AST SpaceMobile with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AST SpaceMobile and BASF SE.

Diversification Opportunities for AST SpaceMobile and BASF SE

-0.41

Correlation Coefficient

AST SpaceMobile  BASF SE

Very good diversification

The 3 months correlation between AST and BASF is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding AST SpaceMobile and BASF SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE ADR and AST SpaceMobile 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 AST SpaceMobile are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE ADR has no effect on the direction of AST SpaceMobile i.e., AST SpaceMobile and BASF SE go up and down completely randomly.

Pair Corralation between AST SpaceMobile and BASF SE

Assuming the 90 days horizon AST SpaceMobile is expected to generate 18.06 times more return on investment than BASF SE. However, AST SpaceMobile is 18.06 times more volatile than BASF SE ADR. It trades about 0.14 of its potential returns per unit of risk. BASF SE ADR is currently generating about -0.04 per unit of risk. If you would invest  59.00  in AST SpaceMobile on February 23, 2024 and sell it today you would earn a total of  51.00  from holding AST SpaceMobile or generate 86.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AST SpaceMobile  vs.  BASF SE ADR

AST SpaceMobile

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AST SpaceMobile are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AST SpaceMobile showed solid returns over the last few months and may actually be approaching a breakup point.

BASF SE ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BASF SE ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, BASF SE may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with AST SpaceMobile and BASF SE

The main advantage of trading using opposite AST SpaceMobile and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AST SpaceMobile position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.

The idea behind AST SpaceMobile and BASF SE ADR 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.