Correlation Between Bayport International and Holiday Island
Can any of the company-specific risk be diversified away by investing in both Bayport International and Holiday Island 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 Bayport International and Holiday Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayport International Holdings and Holiday Island Holdings, you can compare the effects of market volatilities on Bayport International and Holiday Island 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 Bayport International with a short position of Holiday Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayport International and Holiday Island.
Diversification Opportunities for Bayport International and Holiday Island
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bayport and Holiday is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bayport International Holdings and Holiday Island Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Island Holdings and Bayport International 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 Bayport International Holdings are associated (or correlated) with Holiday Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Island Holdings has no effect on the direction of Bayport International i.e., Bayport International and Holiday Island go up and down completely randomly.
Pair Corralation between Bayport International and Holiday Island
Given the investment horizon of 90 days Bayport International Holdings is expected to generate 2.03 times more return on investment than Holiday Island. However, Bayport International is 2.03 times more volatile than Holiday Island Holdings. It trades about 0.07 of its potential returns per unit of risk. Holiday Island Holdings is currently generating about 0.06 per unit of risk. If you would invest 0.81 in Bayport International Holdings on November 19, 2024 and sell it today you would lose (0.80) from holding Bayport International Holdings or give up 98.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayport International Holdings vs. Holiday Island Holdings
Performance |
| Timeline |
| Bayport International |
| Holiday Island Holdings |
Bayport International and Holiday Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayport International and Holiday Island
The main advantage of trading using opposite Bayport International and Holiday Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayport International position performs unexpectedly, Holiday Island 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 Holiday Island will offset losses from the drop in Holiday Island's long position.| Bayport International vs. Hong Kong Land | Bayport International vs. Wharf Holdings | Bayport International vs. Holiday Island Holdings | Bayport International vs. Sun Hung Kai |
| Holiday Island vs. Hong Kong Land | Holiday Island vs. Wharf Holdings | Holiday Island vs. Sun Hung Kai | Holiday Island vs. Bayport International Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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