Correlation Between Holiday Island and Bayport International

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

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

Diversification Opportunities for Holiday Island and Bayport International

-0.04

Correlation Coefficient

Holiday Island  Bayport International

Good diversification

The 3 months correlation between Holiday and Bayport is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Island Holdings and Bayport International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayport International and Holiday Island 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 Holiday Island Holdings are associated (or correlated) with Bayport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayport International has no effect on the direction of Holiday Island i.e., Holiday Island and Bayport International go up and down completely randomly.

Pair Corralation between Holiday Island and Bayport International

If you would invest  0.01  in Bayport International Holdings on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Bayport International Holdings or generate 0.0% return on investment over 90 days.

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

Holiday Island Holdings  vs.  Bayport International Holdings

Holiday Island Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Holiday Island Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Bayport International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bayport International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Bayport International is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Holiday Island and Bayport International

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

The idea behind Holiday Island Holdings and Bayport International 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.

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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.