Correlation Between Banestes and Bicicletas Monark
Can any of the company-specific risk be diversified away by investing in both Banestes and Bicicletas Monark 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 Banestes and Bicicletas Monark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banestes SA and Bicicletas Monark SA, you can compare the effects of market volatilities on Banestes and Bicicletas Monark 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 Banestes with a short position of Bicicletas Monark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banestes and Bicicletas Monark.
Diversification Opportunities for Banestes and Bicicletas Monark
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Banestes and Bicicletas is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Banestes SA and Bicicletas Monark SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bicicletas Monark and Banestes 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 Banestes SA are associated (or correlated) with Bicicletas Monark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bicicletas Monark has no effect on the direction of Banestes i.e., Banestes and Bicicletas Monark go up and down completely randomly.
Pair Corralation between Banestes and Bicicletas Monark
Assuming the 90 days trading horizon Banestes SA is expected to under-perform the Bicicletas Monark. But the stock apears to be less risky and, when comparing its historical volatility, Banestes SA is 1.39 times less risky than Bicicletas Monark. The stock trades about -0.35 of its potential returns per unit of risk. The Bicicletas Monark SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 30,620 in Bicicletas Monark SA on August 24, 2024 and sell it today you would earn a total of 874.00 from holding Bicicletas Monark SA or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banestes SA vs. Bicicletas Monark SA
Performance |
| Timeline |
| Banestes SA |
| Bicicletas Monark |
Banestes and Bicicletas Monark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banestes and Bicicletas Monark
The main advantage of trading using opposite Banestes and Bicicletas Monark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banestes position performs unexpectedly, Bicicletas Monark 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 Bicicletas Monark will offset losses from the drop in Bicicletas Monark's long position.The idea behind Banestes SA and Bicicletas Monark SA 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.| Bicicletas Monark vs. Bombril SA | Bicicletas Monark vs. Bahema Educao SA | Bicicletas Monark vs. Banestes SA | Bicicletas Monark vs. Banco Alfa de |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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