Correlation Between ONWARD MEDICAL and Bannerman Resources

Can any of the company-specific risk be diversified away by investing in both ONWARD MEDICAL and Bannerman Resources 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 ONWARD MEDICAL and Bannerman Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ONWARD MEDICAL BV and Bannerman Resources Limited, you can compare the effects of market volatilities on ONWARD MEDICAL and Bannerman Resources 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 ONWARD MEDICAL with a short position of Bannerman Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONWARD MEDICAL and Bannerman Resources.

Diversification Opportunities for ONWARD MEDICAL and Bannerman Resources

0.71

Correlation Coefficient

ONWARD MEDICAL  Bannerman Resources

Poor diversification

The 3 months correlation between ONWARD and Bannerman is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ONWARD MEDICAL BV and Bannerman Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bannerman Resources and ONWARD MEDICAL 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 ONWARD MEDICAL BV are associated (or correlated) with Bannerman Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bannerman Resources has no effect on the direction of ONWARD MEDICAL i.e., ONWARD MEDICAL and Bannerman Resources go up and down completely randomly.

Pair Corralation between ONWARD MEDICAL and Bannerman Resources

Assuming the 90 days horizon ONWARD MEDICAL is expected to generate 1.43 times less return on investment than Bannerman Resources. In addition to that, ONWARD MEDICAL is 1.19 times more volatile than Bannerman Resources Limited. It trades about 0.02 of its total potential returns per unit of risk. Bannerman Resources Limited is currently generating about 0.04 per unit of volatility. If you would invest  118.00  in Bannerman Resources Limited on September 26, 2024 and sell it today you would earn a total of  54.00  from holding Bannerman Resources Limited or generate 45.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ONWARD MEDICAL BV  vs.  Bannerman Resources Limited

ONWARD MEDICAL BV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ONWARD MEDICAL BV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ONWARD MEDICAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bannerman Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bannerman Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ONWARD MEDICAL and Bannerman Resources

The main advantage of trading using opposite ONWARD MEDICAL and Bannerman Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONWARD MEDICAL position performs unexpectedly, Bannerman Resources 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 Bannerman Resources will offset losses from the drop in Bannerman Resources' long position.

The idea behind ONWARD MEDICAL BV and Bannerman Resources Limited 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.