Correlation Between BASE and Automatic Bank

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

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

Diversification Opportunities for BASE and Automatic Bank

-0.53

Correlation Coefficient

BASE  Automatic Bank

Excellent diversification

The 3 months correlation between BASE and Automatic is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Automatic Bank Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Bank Services and BASE 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 BASE Inc are associated (or correlated) with Automatic Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Bank Services has no effect on the direction of BASE i.e., BASE and Automatic Bank go up and down completely randomly.

Pair Corralation between BASE and Automatic Bank

Assuming the 90 days horizon BASE Inc is expected to under-perform the Automatic Bank. In addition to that, BASE is 5.58 times more volatile than Automatic Bank Services. It trades about -0.06 of its total potential returns per unit of risk. Automatic Bank Services is currently generating about 0.07 per unit of volatility. If you would invest  577.00  in Automatic Bank Services on August 12, 2025 and sell it today you would earn a total of  13.00  from holding Automatic Bank Services or generate 2.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

BASE Inc  vs.  Automatic Bank Services

BASE Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days BASE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Automatic Bank Services

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Bank Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Automatic Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BASE and Automatic Bank

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

The idea behind BASE Inc and Automatic Bank Services 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.