Correlation Between Holiday Island and Bayport International
Can any of the company-specific risk be diversified away by investing in both Holiday Island and Bayport 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 Holiday Island and Bayport International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holiday Island Holdings and Bayport International Holdings, you can compare the effects of market volatilities on Holiday Island and Bayport 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 Holiday Island with a short position of Bayport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Island and Bayport International.
Diversification Opportunities for Holiday Island and Bayport International
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Holiday and Bayport is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Island Holdings and Bayport International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayport International and Holiday Island 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 Holiday Island Holdings are associated (or correlated) with Bayport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayport International has no effect on the direction of Holiday Island i.e., Holiday Island and Bayport International go up and down completely randomly.
Pair Corralation between Holiday Island and Bayport International
Given the investment horizon of 90 days Holiday Island is expected to generate 2.18 times less return on investment than Bayport International. But when comparing it to its historical volatility, Holiday Island Holdings is 2.03 times less risky than Bayport International. It trades about 0.07 of its potential returns per unit of risk. Bayport International Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Bayport International Holdings on November 2, 2024 and sell it today you would lose (0.79) from holding Bayport International Holdings or give up 98.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holiday Island Holdings vs. Bayport International Holdings
Performance |
| Timeline |
| Holiday Island Holdings |
| Bayport International |
Holiday Island and Bayport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Island and Bayport International
The main advantage of trading using opposite Holiday Island and Bayport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Island position performs unexpectedly, Bayport 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 Bayport International will offset losses from the drop in Bayport International's long position.| Holiday Island vs. Hong Kong Land | Holiday Island vs. Wharf Holdings | Holiday Island vs. Sun Hung Kai | Holiday Island vs. Bayport International Holdings |
| Bayport International vs. Hong Kong Land | Bayport International vs. Wharf Holdings | Bayport International vs. Holiday Island Holdings | Bayport International vs. Sun Hung Kai |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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