Correlation Between GBT Technologies and Banxa Holdings

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

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

Diversification Opportunities for GBT Technologies and Banxa Holdings

-0.2

Correlation Coefficient

GBT Technologies  Banxa Holdings

Good diversification

The 3 months correlation between GBT and Banxa is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding GBT Technologies and Banxa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banxa Holdings and GBT Technologies 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 GBT Technologies 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 GBT Technologies i.e., GBT Technologies and Banxa Holdings go up and down completely randomly.

Pair Corralation between GBT Technologies and Banxa Holdings

Given the investment horizon of 90 days GBT Technologies is expected to generate 22.09 times more return on investment than Banxa Holdings. However, GBT Technologies is 22.09 times more volatile than Banxa Holdings. It trades about 0.23 of its potential returns per unit of risk. Banxa Holdings is currently generating about 0.18 per unit of risk. If you would invest  0.01  in GBT Technologies on September 12, 2024 and sell it today you would earn a total of  0.00  from holding GBT Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

GBT Technologies  vs.  Banxa Holdings

GBT Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GBT Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, GBT Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Banxa Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banxa Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Banxa Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GBT Technologies and Banxa Holdings

The main advantage of trading using opposite GBT Technologies and Banxa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBT Technologies 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 GBT Technologies 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.