Correlation Between BankInv Kort and BankInvest Select

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

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

Diversification Opportunities for BankInv Kort and BankInvest Select

0.35

Correlation Coefficient

BankInv Kort  BankInvest Select

Weak diversification

The 3 months correlation between BankInv and BankInvest is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding BankInv Kort HY and BankInvest Select Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Select Small and BankInv Kort 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 BankInv Kort HY are associated (or correlated) with BankInvest Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Select Small has no effect on the direction of BankInv Kort i.e., BankInv Kort and BankInvest Select go up and down completely randomly.

Pair Corralation between BankInv Kort and BankInvest Select

Assuming the 90 days trading horizon BankInv Kort is expected to generate 4.75 times less return on investment than BankInvest Select. But when comparing it to its historical volatility, BankInv Kort HY is 6.84 times less risky than BankInvest Select. It trades about 0.19 of its potential returns per unit of risk. BankInvest Select Small is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  11,115  in BankInvest Select Small on October 25, 2024 and sell it today you would earn a total of  225.00  from holding BankInvest Select Small or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	82.35%
Values	Daily Returns

BankInv Kort HY  vs.  BankInvest Select Small

BankInv Kort HY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInv Kort HY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BankInv Kort is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BankInvest Select Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Select Small are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, BankInvest Select may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BankInv Kort and BankInvest Select

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

The idea behind BankInv Kort HY and BankInvest Select Small 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.