Correlation Between Betterware and Digimarc

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

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

Diversification Opportunities for Betterware and Digimarc

-0.82

Correlation Coefficient

Betterware  Digimarc

Pay attention - limited upside

The 3 months correlation between Betterware and Digimarc is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Betterware De Mexico and Digimarc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digimarc and Betterware 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 Betterware De Mexico are associated (or correlated) with Digimarc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digimarc has no effect on the direction of Betterware i.e., Betterware and Digimarc go up and down completely randomly.

Pair Corralation between Betterware and Digimarc

Given the investment horizon of 90 days Betterware De Mexico is expected to generate 0.89 times more return on investment than Digimarc. However, Betterware De Mexico is 1.13 times less risky than Digimarc. It trades about 0.08 of its potential returns per unit of risk. Digimarc is currently generating about 0.05 per unit of risk. If you would invest  656.00  in Betterware De Mexico on February 1, 2024 and sell it today you would earn a total of  1,026  from holding Betterware De Mexico or generate 156.4% return on investment over 90 days.

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

Betterware De Mexico  vs.  Digimarc

Betterware De Mexico

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Betterware De Mexico are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Betterware showed solid returns over the last few months and may actually be approaching a breakup point.

Digimarc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digimarc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Betterware and Digimarc

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

The idea behind Betterware De Mexico and Digimarc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..