Correlation Between Globe Metals and BNK Banking

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

By analyzing existing cross correlation between Globe Metals Mining and BNK Banking, you can compare the effects of market volatilities on Globe Metals and BNK Banking 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 Globe Metals with a short position of BNK Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and BNK Banking.

Diversification Opportunities for Globe Metals and BNK Banking

0.68

Correlation Coefficient

Globe Metals  BNK Banking

Poor diversification

The 3 months correlation between Globe and BNK is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and BNK Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Banking and Globe Metals 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 Globe Metals Mining are associated (or correlated) with BNK Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Banking has no effect on the direction of Globe Metals i.e., Globe Metals and BNK Banking go up and down completely randomly.

Pair Corralation between Globe Metals and BNK Banking

Assuming the 90 days trading horizon Globe Metals Mining is expected to under-perform the BNK Banking. In addition to that, Globe Metals is 1.12 times more volatile than BNK Banking. It trades about -0.1 of its total potential returns per unit of risk. BNK Banking is currently generating about 0.06 per unit of volatility. If you would invest  30.00  in BNK Banking on December 4, 2024 and sell it today you would earn a total of  1.00  from holding BNK Banking or generate 3.33% return on investment over 90 days.

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

Globe Metals Mining  vs.  BNK Banking

Globe Metals Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globe Metals Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BNK Banking

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BNK Banking are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, BNK Banking is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Globe Metals and BNK Banking

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

The idea behind Globe Metals Mining and BNK Banking 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.