Correlation Between Bloomsbury Publishing and Ajax Resources

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

By analyzing existing cross correlation between Bloomsbury Publishing Plc and Ajax Resources PLC, you can compare the effects of market volatilities on Bloomsbury Publishing and Ajax Resources 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 Bloomsbury Publishing with a short position of Ajax Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and Ajax Resources.

Diversification Opportunities for Bloomsbury Publishing and Ajax Resources

0.26

Correlation Coefficient

Bloomsbury Publishing  Ajax Resources

Modest diversification

The 3 months correlation between Bloomsbury and Ajax is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and Ajax Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajax Resources PLC and Bloomsbury Publishing 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 Bloomsbury Publishing Plc are associated (or correlated) with Ajax Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajax Resources PLC has no effect on the direction of Bloomsbury Publishing i.e., Bloomsbury Publishing and Ajax Resources go up and down completely randomly.

Pair Corralation between Bloomsbury Publishing and Ajax Resources

Assuming the 90 days trading horizon Bloomsbury Publishing is expected to generate 1.7 times less return on investment than Ajax Resources. In addition to that, Bloomsbury Publishing is 1.93 times more volatile than Ajax Resources PLC. It trades about 0.04 of its total potential returns per unit of risk. Ajax Resources PLC is currently generating about 0.12 per unit of volatility. If you would invest  275.00  in Ajax Resources PLC on September 18, 2024 and sell it today you would earn a total of  25.00  from holding Ajax Resources PLC or generate 9.09% return on investment over 90 days.

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

Bloomsbury Publishing Plc  vs.  Ajax Resources PLC

Bloomsbury Publishing Plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomsbury Publishing Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bloomsbury Publishing is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ajax Resources PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ajax Resources PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ajax Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bloomsbury Publishing and Ajax Resources

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

The idea behind Bloomsbury Publishing Plc and Ajax Resources PLC 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.