Correlation Between Banyan Tree and Galaxy Entertainment

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

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

Diversification Opportunities for Banyan Tree and Galaxy Entertainment

0.0

Correlation Coefficient

Banyan Tree  Galaxy Entertainment

Pay attention - limited upside

The 3 months correlation between Banyan and Galaxy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banyan Tree Holdings and Galaxy Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Entertainment and Banyan Tree 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 Banyan Tree Holdings are associated (or correlated) with Galaxy Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Entertainment has no effect on the direction of Banyan Tree i.e., Banyan Tree and Galaxy Entertainment go up and down completely randomly.

Pair Corralation between Banyan Tree and Galaxy Entertainment

Assuming the 90 days horizon Banyan Tree Holdings is expected to under-perform the Galaxy Entertainment. In addition to that, Banyan Tree is 3.2 times more volatile than Galaxy Entertainment Group. It trades about -0.09 of its total potential returns per unit of risk. Galaxy Entertainment Group is currently generating about 0.13 per unit of volatility. If you would invest  1,790  in Galaxy Entertainment Group on September 14, 2024 and sell it today you would earn a total of  523.00  from holding Galaxy Entertainment Group or generate 29.22% return on investment over 90 days.

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

Banyan Tree Holdings  vs.  Galaxy Entertainment Group

Banyan Tree Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banyan Tree 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Galaxy Entertainment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Entertainment Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Galaxy Entertainment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banyan Tree and Galaxy Entertainment

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

The idea behind Banyan Tree Holdings and Galaxy Entertainment Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.