Correlation Between Bottomline Technologies and Datasea

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

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

Diversification Opportunities for Bottomline Technologies and Datasea

-0.45

Correlation Coefficient

Bottomline Technologies  Datasea

Very good diversification

The 3 months correlation between Bottomline and Datasea is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bottomline Technologies and Datasea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datasea and Bottomline Technologies 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 Bottomline Technologies are associated (or correlated) with Datasea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datasea has no effect on the direction of Bottomline Technologies i.e., Bottomline Technologies and Datasea go up and down completely randomly.

Pair Corralation between Bottomline Technologies and Datasea

Given the investment horizon of 90 days Bottomline Technologies is expected to generate 8.83 times less return on investment than Datasea. But when comparing it to its historical volatility, Bottomline Technologies is 64.24 times less risky than Datasea. It trades about 0.19 of its potential returns per unit of risk. Datasea is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,425  in Datasea on January 24, 2024 and sell it today you would lose (3,675) from holding Datasea or give up 83.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.82%
Values	Daily Returns

Bottomline Technologies  vs.  Datasea

Bottomline Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bottomline Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bottomline Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Datasea

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datasea are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Datasea unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bottomline Technologies and Datasea

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

The idea behind Bottomline Technologies and Datasea 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.