Correlation Between Bannerman Resources and ONWARD MEDICAL

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

By analyzing existing cross correlation between Bannerman Resources Limited and ONWARD MEDICAL BV, you can compare the effects of market volatilities on Bannerman Resources and ONWARD MEDICAL 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 Bannerman Resources with a short position of ONWARD MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bannerman Resources and ONWARD MEDICAL.

Diversification Opportunities for Bannerman Resources and ONWARD MEDICAL

0.71

Correlation Coefficient

Bannerman Resources  ONWARD MEDICAL

Poor diversification

The 3 months correlation between Bannerman and ONWARD is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bannerman Resources Limited and ONWARD MEDICAL BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONWARD MEDICAL BV and Bannerman Resources 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 Bannerman Resources Limited are associated (or correlated) with ONWARD MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONWARD MEDICAL BV has no effect on the direction of Bannerman Resources i.e., Bannerman Resources and ONWARD MEDICAL go up and down completely randomly.

Pair Corralation between Bannerman Resources and ONWARD MEDICAL

Assuming the 90 days horizon Bannerman Resources Limited is expected to generate 0.86 times more return on investment than ONWARD MEDICAL. However, Bannerman Resources Limited is 1.17 times less risky than ONWARD MEDICAL. It trades about 0.04 of its potential returns per unit of risk. ONWARD MEDICAL BV is currently generating about 0.02 per unit of risk. If you would invest  103.00  in Bannerman Resources Limited on September 26, 2024 and sell it today you would earn a total of  69.00  from holding Bannerman Resources Limited or generate 66.99% return on investment over 90 days.

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

Bannerman Resources Limited  vs.  ONWARD MEDICAL BV

Bannerman Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bannerman Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ONWARD MEDICAL BV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ONWARD MEDICAL BV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ONWARD MEDICAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bannerman Resources and ONWARD MEDICAL

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

The idea behind Bannerman Resources Limited and ONWARD MEDICAL BV 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 Global Correlations module to find global opportunities by holding instruments from different markets.