Correlation Between BankInvest Optima and Maj Invest

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Can any of the company-specific risk be diversified away by investing in both BankInvest Optima and Maj Invest 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 BankInvest Optima and Maj Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BankInvest Optima 30 and Maj Invest Glob, you can compare the effects of market volatilities on BankInvest Optima and Maj Invest 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 BankInvest Optima with a short position of Maj Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Optima and Maj Invest.

Diversification Opportunities for BankInvest Optima and Maj Invest

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between BankInvest and Maj is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Optima 30 and Maj Invest Glob in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest Glob and BankInvest Optima 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 BankInvest Optima 30 are associated (or correlated) with Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest Glob has no effect on the direction of BankInvest Optima i.e., BankInvest Optima and Maj Invest go up and down completely randomly.

Pair Corralation between BankInvest Optima and Maj Invest

Assuming the 90 days trading horizon BankInvest Optima is expected to generate 2.07 times less return on investment than Maj Invest. But when comparing it to its historical volatility, BankInvest Optima 30 is 1.79 times less risky than Maj Invest. It trades about 0.15 of its potential returns per unit of risk. Maj Invest Glob is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  13,710  in Maj Invest Glob on August 25, 2024 and sell it today you would earn a total of  530.00  from holding Maj Invest Glob or generate 3.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

BankInvest Optima 30  vs.  Maj Invest Glob

 Performance 
       Timeline  
BankInvest Optima 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Optima 30 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Maj Invest Glob 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest Glob are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Maj Invest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

BankInvest Optima and Maj Invest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BankInvest Optima and Maj Invest

The main advantage of trading using opposite BankInvest Optima and Maj Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankInvest Optima position performs unexpectedly, Maj Invest 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 Maj Invest will offset losses from the drop in Maj Invest's long position.
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The idea behind BankInvest Optima 30 and Maj Invest Glob 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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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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