Correlation Between Mirriad Advertising and GBX International

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

By analyzing existing cross correlation between Mirriad Advertising plc and GBX International Group, you can compare the effects of market volatilities on Mirriad Advertising and GBX 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 Mirriad Advertising with a short position of GBX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirriad Advertising and GBX International.

Diversification Opportunities for Mirriad Advertising and GBX International

-0.54

Correlation Coefficient

Mirriad Advertising  GBX International

Excellent diversification

The 3 months correlation between Mirriad and GBX is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mirriad Advertising plc and GBX International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBX International and Mirriad Advertising 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 Mirriad Advertising plc are associated (or correlated) with GBX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBX International has no effect on the direction of Mirriad Advertising i.e., Mirriad Advertising and GBX International go up and down completely randomly.

Pair Corralation between Mirriad Advertising and GBX International

Assuming the 90 days horizon Mirriad Advertising plc is expected to under-perform the GBX International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mirriad Advertising plc is 9.95 times less risky than GBX International. The pink sheet trades about -0.04 of its potential returns per unit of risk. The GBX International Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.01  in GBX International Group on September 23, 2024 and sell it today you would earn a total of  0.01  from holding GBX International Group or generate 100.0% return on investment over 90 days.

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

Mirriad Advertising plc  vs.  GBX International Group

Mirriad Advertising plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirriad Advertising plc 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 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.

GBX International

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Mirriad Advertising and GBX International

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

The idea behind Mirriad Advertising plc and GBX International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.