Correlation Between BankInvest Select and PARKEN Sport

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

By analyzing existing cross correlation between BankInvest Select Small and PARKEN Sport Entertainment, you can compare the effects of market volatilities on BankInvest Select and PARKEN Sport 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 Select with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Select and PARKEN Sport.

Diversification Opportunities for BankInvest Select and PARKEN Sport

0.5

Correlation Coefficient

BankInvest Select  PARKEN Sport

Very weak diversification

The 3 months correlation between BankInvest and PARKEN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Select Small and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and BankInvest Select 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 Select Small are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of BankInvest Select i.e., BankInvest Select and PARKEN Sport go up and down completely randomly.

Pair Corralation between BankInvest Select and PARKEN Sport

Assuming the 90 days trading horizon BankInvest Select Small is expected to under-perform the PARKEN Sport. But the stock apears to be less risky and, when comparing its historical volatility, BankInvest Select Small is 3.56 times less risky than PARKEN Sport. The stock trades about -0.17 of its potential returns per unit of risk. The PARKEN Sport Entertainment is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12,600  in PARKEN Sport Entertainment on October 11, 2024 and sell it today you would earn a total of  750.00  from holding PARKEN Sport Entertainment or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.33%
Values	Daily Returns

BankInvest Select Small  vs.  PARKEN Sport Entertainment

BankInvest Select Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Select Small are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, BankInvest Select is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PARKEN Sport Enterta

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, PARKEN Sport may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BankInvest Select and PARKEN Sport

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

The idea behind BankInvest Select Small and PARKEN Sport Entertainment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.