Correlation Between BOS Better and Amada

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

By analyzing existing cross correlation between BOS Better Online and Amada Co, you can compare the effects of market volatilities on BOS Better and Amada 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 BOS Better with a short position of Amada. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and Amada.

Diversification Opportunities for BOS Better and Amada

0.26

Correlation Coefficient

BOS Better  Amada

Modest diversification

The 3 months correlation between BOS and Amada is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and Amada Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amada and BOS Better 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 BOS Better Online are associated (or correlated) with Amada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amada has no effect on the direction of BOS Better i.e., BOS Better and Amada go up and down completely randomly.

Pair Corralation between BOS Better and Amada

Given the investment horizon of 90 days BOS Better Online is expected to generate 2.09 times more return on investment than Amada. However, BOS Better is 2.09 times more volatile than Amada Co. It trades about 0.04 of its potential returns per unit of risk. Amada Co is currently generating about 0.09 per unit of risk. If you would invest  208.00  in BOS Better Online on February 5, 2024 and sell it today you would earn a total of  70.00  from holding BOS Better Online or generate 33.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.7%
Values	Daily Returns

BOS Better Online  vs.  Amada Co

BOS Better Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOS Better Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BOS Better is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Amada

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amada Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Amada may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with BOS Better and Amada

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

The idea behind BOS Better Online and Amada Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.