Correlation Between Banxa Holdings and Global Develpmts

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

By analyzing existing cross correlation between Banxa Holdings and Global Develpmts, you can compare the effects of market volatilities on Banxa Holdings and Global Develpmts 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 Banxa Holdings with a short position of Global Develpmts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banxa Holdings and Global Develpmts.

Diversification Opportunities for Banxa Holdings and Global Develpmts

0.4

Correlation Coefficient

Banxa Holdings  Global Develpmts

Very weak diversification

The 3 months correlation between Banxa and Global is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Banxa Holdings and Global Develpmts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Develpmts and Banxa Holdings 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 Banxa Holdings are associated (or correlated) with Global Develpmts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Develpmts has no effect on the direction of Banxa Holdings i.e., Banxa Holdings and Global Develpmts go up and down completely randomly.

Pair Corralation between Banxa Holdings and Global Develpmts

Assuming the 90 days horizon Banxa Holdings is expected to under-perform the Global Develpmts. But the pink sheet apears to be less risky and, when comparing its historical volatility, Banxa Holdings is 1.62 times less risky than Global Develpmts. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Global Develpmts is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.20  in Global Develpmts on December 28, 2024 and sell it today you would lose (0.35) from holding Global Develpmts or give up 29.17% of portfolio value over 90 days.

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

Banxa Holdings  vs.  Global Develpmts

Banxa Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banxa Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Global Develpmts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Develpmts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very conflicting basic indicators, Global Develpmts may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Banxa Holdings and Global Develpmts

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

The idea behind Banxa Holdings and Global Develpmts 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.