Correlation Between Biztech Konsulting and GI Group

Can any of the company-specific risk be diversified away by investing in both Biztech Konsulting and GI Group 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 Biztech Konsulting and GI Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Biztech Konsulting SA and GI Group Poland, you can compare the effects of market volatilities on Biztech Konsulting and GI Group 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 Biztech Konsulting with a short position of GI Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biztech Konsulting and GI Group.

Diversification Opportunities for Biztech Konsulting and GI Group

-0.59

Correlation Coefficient

Biztech Konsulting  GI Group

Excellent diversification

The 3 months correlation between Biztech and GIG is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Biztech Konsulting SA and GI Group Poland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GI Group Poland and Biztech Konsulting 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 Biztech Konsulting SA are associated (or correlated) with GI Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GI Group Poland has no effect on the direction of Biztech Konsulting i.e., Biztech Konsulting and GI Group go up and down completely randomly.

Pair Corralation between Biztech Konsulting and GI Group

Assuming the 90 days trading horizon Biztech Konsulting SA is expected to under-perform the GI Group. In addition to that, Biztech Konsulting is 1.56 times more volatile than GI Group Poland. It trades about -0.03 of its total potential returns per unit of risk. GI Group Poland is currently generating about 0.13 per unit of volatility. If you would invest  144.00  in GI Group Poland on December 27, 2024 and sell it today you would earn a total of  37.00  from holding GI Group Poland or generate 25.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Biztech Konsulting SA  vs.  GI Group Poland

Biztech Konsulting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biztech Konsulting SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

GI Group Poland

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GI Group Poland are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, GI Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biztech Konsulting and GI Group

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

The idea behind Biztech Konsulting SA and GI Group Poland 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.