Correlation Between Arcadia Minerals and BNK Banking

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

By analyzing existing cross correlation between Arcadia Minerals Ltd and BNK Banking, you can compare the effects of market volatilities on Arcadia Minerals and BNK Banking 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 Arcadia Minerals with a short position of BNK Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcadia Minerals and BNK Banking.

Diversification Opportunities for Arcadia Minerals and BNK Banking

-0.23

Correlation Coefficient

Arcadia Minerals  BNK Banking

Very good diversification

The 3 months correlation between Arcadia and BNK is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arcadia Minerals Ltd and BNK Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Banking and Arcadia Minerals 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 Arcadia Minerals Ltd are associated (or correlated) with BNK Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Banking has no effect on the direction of Arcadia Minerals i.e., Arcadia Minerals and BNK Banking go up and down completely randomly.

Pair Corralation between Arcadia Minerals and BNK Banking

Assuming the 90 days trading horizon Arcadia Minerals Ltd is expected to generate 0.94 times more return on investment than BNK Banking. However, Arcadia Minerals Ltd is 1.06 times less risky than BNK Banking. It trades about 0.04 of its potential returns per unit of risk. BNK Banking is currently generating about -0.04 per unit of risk. If you would invest  1.90  in Arcadia Minerals Ltd on December 29, 2024 and sell it today you would earn a total of  0.10  from holding Arcadia Minerals Ltd or generate 5.26% return on investment over 90 days.

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

Arcadia Minerals Ltd  vs.  BNK Banking

Arcadia Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arcadia Minerals Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Arcadia Minerals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BNK Banking

Risk-Adjusted Performance

Very Weak

Over the last 90 days BNK Banking has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Arcadia Minerals and BNK Banking

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

The idea behind Arcadia Minerals Ltd and BNK Banking 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.