Correlation Between Maj Invest and BankInvest Optima

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

By analyzing existing cross correlation between Maj Invest and BankInvest Optima 10, you can compare the effects of market volatilities on Maj Invest and BankInvest Optima 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 Maj Invest with a short position of BankInvest Optima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maj Invest and BankInvest Optima.

Diversification Opportunities for Maj Invest and BankInvest Optima

0.51

Correlation Coefficient

Maj Invest  BankInvest Optima

Very weak diversification

The 3 months correlation between Maj and BankInvest is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest and BankInvest Optima 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Optima and Maj Invest 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 Maj Invest are associated (or correlated) with BankInvest Optima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Optima has no effect on the direction of Maj Invest i.e., Maj Invest and BankInvest Optima go up and down completely randomly.

Pair Corralation between Maj Invest and BankInvest Optima

Assuming the 90 days trading horizon Maj Invest is expected to under-perform the BankInvest Optima. In addition to that, Maj Invest is 1.26 times more volatile than BankInvest Optima 10. It trades about -0.11 of its total potential returns per unit of risk. BankInvest Optima 10 is currently generating about -0.08 per unit of volatility. If you would invest  10,350  in BankInvest Optima 10 on December 25, 2024 and sell it today you would lose (145.00) from holding BankInvest Optima 10 or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Maj Invest   vs.  BankInvest Optima 10

Maj Invest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maj Invest has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward-looking indicators, Maj Invest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BankInvest Optima

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Optima 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Maj Invest and BankInvest Optima

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

The idea behind Maj Invest and BankInvest Optima 10 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.