Correlation Between Nagarro SE and Banxa Holdings

Can any of the company-specific risk be diversified away by investing in both Nagarro SE and Banxa Holdings 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 Nagarro SE and Banxa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Nagarro SE and Banxa Holdings

0.38

Correlation Coefficient

Nagarro SE  Banxa Holdings

Weak diversification

The 3 months correlation between Nagarro and Banxa is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nagarro SE and Banxa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banxa Holdings and Nagarro SE 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 Nagarro SE are associated (or correlated) with Banxa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banxa Holdings has no effect on the direction of Nagarro SE i.e., Nagarro SE and Banxa Holdings go up and down completely randomly.

Pair Corralation between Nagarro SE and Banxa Holdings

Assuming the 90 days horizon Nagarro SE is expected to generate 6.65 times less return on investment than Banxa Holdings. But when comparing it to its historical volatility, Nagarro SE is 3.16 times less risky than Banxa Holdings. It trades about 0.08 of its potential returns per unit of risk. Banxa Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Banxa Holdings on September 12, 2024 and sell it today you would earn a total of  33.00  from holding Banxa Holdings or generate 137.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Nagarro SE  vs.  Banxa Holdings

Nagarro SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nagarro SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nagarro SE reported solid returns over the last few months and may actually be approaching a breakup point.

Banxa Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banxa Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Banxa Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nagarro SE and Banxa Holdings

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

The idea behind Nagarro SE and Banxa 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.