Correlation Between Biglari Holdings and 51Talk Online

Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and 51Talk Online 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 Biglari Holdings and 51Talk Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Biglari Holdings and 51Talk Online Education, you can compare the effects of market volatilities on Biglari Holdings and 51Talk Online 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 Biglari Holdings with a short position of 51Talk Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and 51Talk Online.

Diversification Opportunities for Biglari Holdings and 51Talk Online

-0.05

Correlation Coefficient

Biglari Holdings  51Talk Online

Good diversification

The 3 months correlation between Biglari and 51Talk is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and 51Talk Online Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 51Talk Online Education and Biglari Holdings 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 Biglari Holdings are associated (or correlated) with 51Talk Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 51Talk Online Education has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and 51Talk Online go up and down completely randomly.

Pair Corralation between Biglari Holdings and 51Talk Online

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.54 times more return on investment than 51Talk Online. However, Biglari Holdings is 1.87 times less risky than 51Talk Online. It trades about 0.25 of its potential returns per unit of risk. 51Talk Online Education is currently generating about 0.03 per unit of risk. If you would invest  17,763  in Biglari Holdings on September 19, 2024 and sell it today you would earn a total of  7,906  from holding Biglari Holdings or generate 44.51% return on investment over 90 days.

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

Biglari Holdings  vs.  51Talk Online Education

Biglari Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

51Talk Online Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, 51Talk Online may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Biglari Holdings and 51Talk Online

The main advantage of trading using opposite Biglari Holdings and 51Talk Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, 51Talk Online 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 51Talk Online will offset losses from the drop in 51Talk Online's long position.

The idea behind Biglari Holdings and 51Talk Online Education 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.