Correlation Between Global Develpmts and Banxa Holdings

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

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

Diversification Opportunities for Global Develpmts and Banxa Holdings

-0.62

Correlation Coefficient

Global Develpmts  Banxa Holdings

Excellent diversification

The 3 months correlation between Global and Banxa is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Global Develpmts and Banxa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banxa Holdings and Global Develpmts 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 Global Develpmts are associated (or correlated) with Banxa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banxa Holdings has no effect on the direction of Global Develpmts i.e., Global Develpmts and Banxa Holdings go up and down completely randomly.

Pair Corralation between Global Develpmts and Banxa Holdings

Given the investment horizon of 90 days Global Develpmts is expected to generate 5.3 times less return on investment than Banxa Holdings. But when comparing it to its historical volatility, Global Develpmts is 1.67 times less risky than Banxa Holdings. It trades about 0.03 of its potential returns per unit of risk. Banxa Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Banxa Holdings on September 4, 2024 and sell it today you would earn a total of  42.00  from holding Banxa Holdings or generate 233.33% return on investment over 90 days.

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

Global Develpmts  vs.  Banxa Holdings

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Banxa Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banxa Holdings are ranked lower than 12 (%) 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.

Pair Trading with Global Develpmts and Banxa Holdings

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

The idea behind Global Develpmts and Banxa Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.