Correlation Between G8 Education and Black Cat
Can any of the company-specific risk be diversified away by investing in both G8 Education and Black Cat 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 G8 Education and Black Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Black Cat Syndicate, you can compare the effects of market volatilities on G8 Education and Black Cat 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 G8 Education with a short position of Black Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Black Cat.
Diversification Opportunities for G8 Education and Black Cat
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GEM and Black is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education and Black Cat Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Cat Syndicate and G8 Education 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 G8 Education are associated (or correlated) with Black Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Cat Syndicate has no effect on the direction of G8 Education i.e., G8 Education and Black Cat go up and down completely randomly.
Pair Corralation between G8 Education and Black Cat
Assuming the 90 days trading horizon G8 Education is expected to under-perform the Black Cat. But the stock apears to be less risky and, when comparing its historical volatility, G8 Education is 2.46 times less risky than Black Cat. The stock trades about -0.05 of its potential returns per unit of risk. The Black Cat Syndicate is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Black Cat Syndicate on August 25, 2024 and sell it today you would earn a total of 22.00 from holding Black Cat Syndicate or generate 53.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 Education vs. Black Cat Syndicate
Performance |
| Timeline |
| G8 Education |
| Black Cat Syndicate |
G8 Education and Black Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Black Cat
The main advantage of trading using opposite G8 Education and Black Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education position performs unexpectedly, Black Cat 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 Black Cat will offset losses from the drop in Black Cat's long position.| G8 Education vs. Dexus Convenience Retail | G8 Education vs. Kneomedia | G8 Education vs. Richmond Vanadium Technology | G8 Education vs. Retail Food Group |
| Black Cat vs. Home Consortium | Black Cat vs. Kkr Credit Income | Black Cat vs. Land Homes Group | Black Cat vs. G8 Education |
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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