Correlation Between Bank of Georgia and Endo International | BGEO.LSE vs. 0Y5F.LSE

Correlation Between Bank of Georgia and Endo International

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Can any of the company-specific risk be diversified away by investing in both Bank of Georgia and Endo International 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 Bank of Georgia and Endo International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Georgia and Endo International PLC, you can compare the effects of market volatilities on Bank of Georgia and Endo International 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 Bank of Georgia with a short position of Endo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Georgia and Endo International.

Diversification Opportunities for Bank of Georgia and Endo International

BankEndoDiversified AwayBankEndoDiversified Away100%
-0.9
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Bank and Endo is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Georgia and Endo International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endo International PLC and Bank of Georgia 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 Bank of Georgia are associated (or correlated) with Endo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endo International PLC has no effect on the direction of Bank of Georgia i.e., Bank of Georgia and Endo International go up and down completely randomly.

Pair Corralation between Bank of Georgia and Endo International

Assuming the 90 days trading horizon Bank of Georgia is expected to generate 64.95 times less return on investment than Endo International. But when comparing it to its historical volatility, Bank of Georgia is 32.32 times less risky than Endo International. It trades about 0.05 of its potential returns per unit of risk. Endo International PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Endo International PLC on September 24, 2024 and sell it today you would earn a total of  59,939  from holding Endo International PLC or generate 1.9979656667E8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy75.3%
ValuesDaily Returns

Bank of Georgia  vs.  Endo International PLC

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0102030
JavaScript chart by amCharts 3.21.15BGEO 0Y5F
       Timeline  
Bank of Georgia 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Georgia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bank of Georgia unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4,0004,5005,000
Endo International PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Endo International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec600610620630640650660670680690

Bank of Georgia and Endo International Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.57-4.92-3.27-1.620.01.763.545.337.11 0.10.20.30.4
JavaScript chart by amCharts 3.21.15BGEO 0Y5F
       Returns  

Pair Trading with Bank of Georgia and Endo International

The main advantage of trading using opposite Bank of Georgia and Endo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Georgia position performs unexpectedly, Endo International 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 Endo International will offset losses from the drop in Endo International's long position.
The idea behind Bank of Georgia and Endo International PLC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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