Correlation Between Bilendi and Speed Rabbit

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

By analyzing existing cross correlation between Bilendi and Speed Rabbit Pizza, you can compare the effects of market volatilities on Bilendi and Speed Rabbit 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 Bilendi with a short position of Speed Rabbit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilendi and Speed Rabbit.

Diversification Opportunities for Bilendi and Speed Rabbit

0.49

Correlation Coefficient

Bilendi  Speed Rabbit

Very weak diversification

The 3 months correlation between Bilendi and Speed is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bilendi and Speed Rabbit Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Speed Rabbit Pizza and Bilendi 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 Bilendi are associated (or correlated) with Speed Rabbit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Speed Rabbit Pizza has no effect on the direction of Bilendi i.e., Bilendi and Speed Rabbit go up and down completely randomly.

Pair Corralation between Bilendi and Speed Rabbit

Assuming the 90 days trading horizon Bilendi is expected to under-perform the Speed Rabbit. But the stock apears to be less risky and, when comparing its historical volatility, Bilendi is 2.79 times less risky than Speed Rabbit. The stock trades about -0.02 of its potential returns per unit of risk. The Speed Rabbit Pizza is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  930.00  in Speed Rabbit Pizza on October 11, 2024 and sell it today you would earn a total of  2,130  from holding Speed Rabbit Pizza or generate 229.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.42%
Values	Daily Returns

Bilendi  vs.  Speed Rabbit Pizza

Bilendi

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilendi are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bilendi reported solid returns over the last few months and may actually be approaching a breakup point.

Speed Rabbit Pizza

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Speed Rabbit Pizza are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Speed Rabbit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bilendi and Speed Rabbit

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

The idea behind Bilendi and Speed Rabbit Pizza 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.