Correlation Between Bankers Investment and Hardide PLC

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

By analyzing existing cross correlation between Bankers Investment Trust and Hardide PLC, you can compare the effects of market volatilities on Bankers Investment and Hardide PLC 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 Bankers Investment with a short position of Hardide PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and Hardide PLC.

Diversification Opportunities for Bankers Investment and Hardide PLC

-0.32

Correlation Coefficient

Bankers Investment  Hardide PLC

Very good diversification

The 3 months correlation between Bankers and Hardide is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC and Bankers Investment 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 Bankers Investment Trust are associated (or correlated) with Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of Bankers Investment i.e., Bankers Investment and Hardide PLC go up and down completely randomly.

Pair Corralation between Bankers Investment and Hardide PLC

Assuming the 90 days trading horizon Bankers Investment Trust is expected to generate 0.13 times more return on investment than Hardide PLC. However, Bankers Investment Trust is 7.93 times less risky than Hardide PLC. It trades about 0.13 of its potential returns per unit of risk. Hardide PLC is currently generating about 0.01 per unit of risk. If you would invest  11,153  in Bankers Investment Trust on October 8, 2024 and sell it today you would earn a total of  507.00  from holding Bankers Investment Trust or generate 4.55% return on investment over 90 days.

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

Bankers Investment Trust  vs.  Hardide PLC

Bankers Investment Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bankers Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hardide PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hardide PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hardide PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bankers Investment and Hardide PLC

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

The idea behind Bankers Investment Trust and Hardide 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .