Correlation Between BrightView Holdings and ESGL Holdings

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

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

Diversification Opportunities for BrightView Holdings and ESGL Holdings

-0.32

Correlation Coefficient

BrightView Holdings  ESGL Holdings

Very good diversification

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

Pair Corralation between BrightView Holdings and ESGL Holdings

Allowing for the 90-day total investment horizon BrightView Holdings is expected to under-perform the ESGL Holdings. But the stock apears to be less risky and, when comparing its historical volatility, BrightView Holdings is 3.45 times less risky than ESGL Holdings. The stock trades about -0.15 of its potential returns per unit of risk. The ESGL Holdings Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  134.00  in ESGL Holdings Limited on December 25, 2024 and sell it today you would earn a total of  67.00  from holding ESGL Holdings Limited or generate 50.0% return on investment over 90 days.

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

BrightView Holdings  vs.  ESGL Holdings Limited

BrightView Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BrightView Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

ESGL Holdings Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ESGL Holdings Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, ESGL Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BrightView Holdings and ESGL Holdings

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

The idea behind BrightView Holdings and ESGL Holdings Limited 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.