Correlation Between Automata and Boba Network

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

Diversification Opportunities for Automata and Boba Network

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Automata and Boba Network is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Automata and Boba Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boba Network and Automata 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 Automata are associated (or correlated) with Boba Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boba Network has no effect on the direction of Automata i.e., Automata and Boba Network go up and down completely randomly.

Pair Corralation between Automata and Boba Network

Assuming the 90 days trading horizon Automata is expected to under-perform the Boba Network. In addition to that, Automata is 1.32 times more volatile than Boba Network. It trades about -0.12 of its total potential returns per unit of risk. Boba Network is currently generating about -0.02 per unit of volatility. If you would invest  42.00  in Boba Network on April 8, 2022 and sell it today you would lose (4.00)  from holding Boba Network or give up 9.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.91%
ValuesDaily Returns

Automata  vs.  Boba Network

 Performance (%) 
      Timeline 
Automata 
Automata Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Automata are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Automata sustained solid returns over the last few months and may actually be approaching a breakup point.

Automata Price Channel

Boba Network 
Boba Network Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boba Network are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Boba Network sustained solid returns over the last few months and may actually be approaching a breakup point.

Boba Network Price Channel

Automata and Boba Network Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Automata and Boba Network

The main advantage of trading using opposite Automata and Boba Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automata position performs unexpectedly, Boba Network 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 Boba Network will offset losses from the drop in Boba Network's long position.
The idea behind Automata and Boba Network 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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