Correlation Between Bank of Georgia and Sage Group
Can any of the company-specific risk be diversified away by investing in both Bank of Georgia and Sage Group 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 Sage Group 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 Sage Group PLC, you can compare the effects of market volatilities on Bank of Georgia and Sage Group 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 Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Georgia and Sage Group.
Diversification Opportunities for Bank of Georgia and Sage Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Sage is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Georgia and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group 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 Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Bank of Georgia i.e., Bank of Georgia and Sage Group go up and down completely randomly.
Pair Corralation between Bank of Georgia and Sage Group
Assuming the 90 days trading horizon Bank of Georgia is expected to generate 1.83 times more return on investment than Sage Group. However, Bank of Georgia is 1.83 times more volatile than Sage Group PLC. It trades about 0.08 of its potential returns per unit of risk. Sage Group PLC is currently generating about -0.01 per unit of risk. If you would invest 457,500 in Bank of Georgia on October 10, 2024 and sell it today you would earn a total of 9,500 from holding Bank of Georgia or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Georgia vs. Sage Group PLC
Performance |
| Timeline |
| Bank of Georgia |
| Sage Group PLC |
Bank of Georgia and Sage Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Georgia and Sage Group
The main advantage of trading using opposite Bank of Georgia and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Georgia position performs unexpectedly, Sage Group 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 Sage Group will offset losses from the drop in Sage Group's long position.| Bank of Georgia vs. Aeorema Communications Plc | Bank of Georgia vs. Zegona Communications Plc | Bank of Georgia vs. Zoom Video Communications | Bank of Georgia vs. Gamma Communications PLC |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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