Correlation Between Full House and Banyan Tree

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

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

Diversification Opportunities for Full House and Banyan Tree

0.24

Correlation Coefficient

Full House  Banyan Tree

Modest diversification

The 3 months correlation between Full and Banyan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Full House Resorts and Banyan Tree Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Tree Holdings and Full House 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 Full House Resorts are associated (or correlated) with Banyan Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Tree Holdings has no effect on the direction of Full House i.e., Full House and Banyan Tree go up and down completely randomly.

Pair Corralation between Full House and Banyan Tree

Considering the 90-day investment horizon Full House Resorts is expected to generate 0.17 times more return on investment than Banyan Tree. However, Full House Resorts is 6.03 times less risky than Banyan Tree. It trades about -0.1 of its potential returns per unit of risk. Banyan Tree Holdings is currently generating about -0.09 per unit of risk. If you would invest  508.00  in Full House Resorts on September 14, 2024 and sell it today you would lose (68.00) from holding Full House Resorts or give up 13.39% of portfolio value over 90 days.

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

Full House Resorts  vs.  Banyan Tree Holdings

Full House Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Full House Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with Full House and Banyan Tree

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

The idea behind Full House Resorts and Banyan Tree Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.