Correlation Between Banxa Holdings and Global Develpmts

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

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

Diversification Opportunities for Banxa Holdings and Global Develpmts

-0.63

Correlation Coefficient

Banxa Holdings  Global Develpmts

Excellent diversification

The 3 months correlation between Banxa and Global is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Banxa Holdings and Global Develpmts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Develpmts and Banxa 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 Banxa Holdings are associated (or correlated) with Global Develpmts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Develpmts has no effect on the direction of Banxa Holdings i.e., Banxa Holdings and Global Develpmts go up and down completely randomly.

Pair Corralation between Banxa Holdings and Global Develpmts

Assuming the 90 days horizon Banxa Holdings is expected to generate 0.94 times more return on investment than Global Develpmts. However, Banxa Holdings is 1.06 times less risky than Global Develpmts. It trades about 0.21 of its potential returns per unit of risk. Global Develpmts is currently generating about 0.07 per unit of risk. If you would invest  36.00  in Banxa Holdings on September 5, 2024 and sell it today you would earn a total of  18.00  from holding Banxa Holdings or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Banxa Holdings  vs.  Global Develpmts

Banxa Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banxa Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Banxa Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Global Develpmts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Develpmts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global Develpmts is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Banxa Holdings and Global Develpmts

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

The idea behind Banxa Holdings and Global Develpmts 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.