Correlation Between Bounce Mobile and Guardian Capital

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

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

Diversification Opportunities for Bounce Mobile and Guardian Capital

-0.02

Correlation Coefficient

Bounce Mobile  Guardian Capital

Good diversification

The 3 months correlation between Bounce and Guardian is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bounce Mobile Systems and Guardian Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Capital and Bounce Mobile 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 Bounce Mobile Systems are associated (or correlated) with Guardian Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Capital has no effect on the direction of Bounce Mobile i.e., Bounce Mobile and Guardian Capital go up and down completely randomly.

Pair Corralation between Bounce Mobile and Guardian Capital

Given the investment horizon of 90 days Bounce Mobile Systems is expected to generate 21.8 times more return on investment than Guardian Capital. However, Bounce Mobile is 21.8 times more volatile than Guardian Capital Group. It trades about 0.09 of its potential returns per unit of risk. Guardian Capital Group is currently generating about -0.02 per unit of risk. If you would invest  2.35  in Bounce Mobile Systems on September 2, 2024 and sell it today you would lose (0.15) from holding Bounce Mobile Systems or give up 6.38% of portfolio value over 90 days.

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

Bounce Mobile Systems  vs.  Guardian Capital Group

Bounce Mobile Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bounce Mobile Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Bounce Mobile displayed solid returns over the last few months and may actually be approaching a breakup point.

Guardian Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardian Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Guardian Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bounce Mobile and Guardian Capital

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

The idea behind Bounce Mobile Systems and Guardian Capital 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.