Correlation Between Bank of Georgia and Mobile Tornado

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

By analyzing existing cross correlation between Bank of Georgia and Mobile Tornado Group, you can compare the effects of market volatilities on Bank of Georgia and Mobile Tornado 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 Bank of Georgia with a short position of Mobile Tornado. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Georgia and Mobile Tornado.

Diversification Opportunities for Bank of Georgia and Mobile Tornado

0.77

Correlation Coefficient

Bank of Georgia  Mobile Tornado

Poor diversification

The 3 months correlation between Bank and Mobile is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Georgia and Mobile Tornado Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Tornado Group and Bank of Georgia 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 Bank of Georgia are associated (or correlated) with Mobile Tornado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Tornado Group has no effect on the direction of Bank of Georgia i.e., Bank of Georgia and Mobile Tornado go up and down completely randomly.

Pair Corralation between Bank of Georgia and Mobile Tornado

Assuming the 90 days trading horizon Bank of Georgia is expected to generate 0.5 times more return on investment than Mobile Tornado. However, Bank of Georgia is 2.0 times less risky than Mobile Tornado. It trades about -0.15 of its potential returns per unit of risk. Mobile Tornado Group is currently generating about -0.24 per unit of risk. If you would invest  500,000  in Bank of Georgia on September 27, 2024 and sell it today you would lose (30,000) from holding Bank of Georgia or give up 6.0% of portfolio value over 90 days.

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

Bank of Georgia  vs.  Mobile Tornado Group

Bank of Georgia

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Georgia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bank of Georgia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mobile Tornado Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mobile Tornado Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mobile Tornado exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Georgia and Mobile Tornado

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

The idea behind Bank of Georgia and Mobile Tornado Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..