Correlation Between BankInvest Emerging and Maj Invest

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

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

Diversification Opportunities for BankInvest Emerging and Maj Invest

-0.36

Correlation Coefficient

BankInvest Emerging  Maj Invest

Very good diversification

The 3 months correlation between BankInvest and Maj is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Emerging and Maj Invest Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest Emerging and BankInvest Emerging 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 BankInvest Emerging are associated (or correlated) with Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest Emerging has no effect on the direction of BankInvest Emerging i.e., BankInvest Emerging and Maj Invest go up and down completely randomly.

Pair Corralation between BankInvest Emerging and Maj Invest

Assuming the 90 days trading horizon BankInvest Emerging is expected to generate 0.18 times more return on investment than Maj Invest. However, BankInvest Emerging is 5.44 times less risky than Maj Invest. It trades about 0.07 of its potential returns per unit of risk. Maj Invest Emerging is currently generating about -0.09 per unit of risk. If you would invest  17,595  in BankInvest Emerging on December 4, 2024 and sell it today you would earn a total of  190.00  from holding BankInvest Emerging or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.97%
Values	Daily Returns

BankInvest Emerging  vs.  Maj Invest Emerging

BankInvest Emerging

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Emerging are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, BankInvest Emerging is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Maj Invest Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maj Invest Emerging has generated negative risk-adjusted returns adding no value to fund investors. Despite latest conflicting performance, the Fund's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with BankInvest Emerging and Maj Invest

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

The idea behind BankInvest Emerging and Maj Invest Emerging 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.