Correlation Between BankInvest Optima and BankInvest Value

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

By analyzing existing cross correlation between BankInvest Optima 30 and BankInvest Value Globale, you can compare the effects of market volatilities on BankInvest Optima and BankInvest Value 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 Optima with a short position of BankInvest Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Optima and BankInvest Value.

Diversification Opportunities for BankInvest Optima and BankInvest Value

0.85

Correlation Coefficient

BankInvest Optima  BankInvest Value

Very poor diversification

The 3 months correlation between BankInvest and BankInvest is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Optima 30 and BankInvest Value Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Value Globale and BankInvest Optima 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 Optima 30 are associated (or correlated) with BankInvest Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Value Globale has no effect on the direction of BankInvest Optima i.e., BankInvest Optima and BankInvest Value go up and down completely randomly.

Pair Corralation between BankInvest Optima and BankInvest Value

Assuming the 90 days trading horizon BankInvest Optima 30 is expected to generate 0.35 times more return on investment than BankInvest Value. However, BankInvest Optima 30 is 2.82 times less risky than BankInvest Value. It trades about 0.09 of its potential returns per unit of risk. BankInvest Value Globale is currently generating about 0.0 per unit of risk. If you would invest  9,450  in BankInvest Optima 30 on October 4, 2024 and sell it today you would earn a total of  1,670  from holding BankInvest Optima 30 or generate 17.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	82.1%
Values	Daily Returns

BankInvest Optima 30  vs.  BankInvest Value Globale

BankInvest Optima

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Optima 30 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BankInvest Value Globale

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Value Globale are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BankInvest Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BankInvest Optima and BankInvest Value

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

The idea behind BankInvest Optima 30 and BankInvest Value Globale 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.