Correlation Between Berkeley LightsInc and Steel Connect

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

Diversification Opportunities for Berkeley LightsInc and Steel Connect

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Berkeley and Steel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Berkeley LightsInc and Steel Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Connect and Berkeley LightsInc 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 Berkeley LightsInc are associated (or correlated) with Steel Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Connect has no effect on the direction of Berkeley LightsInc i.e., Berkeley LightsInc and Steel Connect go up and down completely randomly.

Pair Corralation between Berkeley LightsInc and Steel Connect

Considering the 90-day investment horizon Berkeley LightsInc is expected to generate 1.44 times more return on investment than Steel Connect. However, Berkeley LightsInc is 1.44 times more volatile than Steel Connect. It trades about 0.35 of its potential returns per unit of risk. Steel Connect is currently generating about -0.2 per unit of risk. If you would invest  197.00  in Berkeley LightsInc on September 3, 2022 and sell it today you would earn a total of  109.00  from holding Berkeley LightsInc or generate 55.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Berkeley LightsInc  vs.  Steel Connect

 Performance (%) 
       Timeline  
Berkeley LightsInc 
Berkeley Performance
0 of 100
Over the last 90 days Berkeley LightsInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Berkeley LightsInc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Berkeley Price Channel

Steel Connect 
Steel Performance
0 of 100
Over the last 90 days Steel Connect has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Steel Price Channel

Berkeley LightsInc and Steel Connect Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Berkeley LightsInc and Steel Connect

The main advantage of trading using opposite Berkeley LightsInc and Steel Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkeley LightsInc position performs unexpectedly, Steel Connect 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 Steel Connect will offset losses from the drop in Steel Connect's long position.
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The idea behind Berkeley LightsInc and Steel Connect 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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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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