Correlation Between Risk George and Burnham Holdings

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

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

Diversification Opportunities for Risk George and Burnham Holdings

0.33

Correlation Coefficient

Risk George  Burnham Holdings

Weak diversification

The 3 months correlation between Risk and Burnham is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Risk George Inds and Burnham Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burnham Holdings and Risk George 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 Risk George Inds are associated (or correlated) with Burnham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burnham Holdings has no effect on the direction of Risk George i.e., Risk George and Burnham Holdings go up and down completely randomly.

Pair Corralation between Risk George and Burnham Holdings

Assuming the 90 days horizon Risk George Inds is expected to generate 0.73 times more return on investment than Burnham Holdings. However, Risk George Inds is 1.36 times less risky than Burnham Holdings. It trades about 0.16 of its potential returns per unit of risk. Burnham Holdings is currently generating about 0.07 per unit of risk. If you would invest  1,626  in Risk George Inds on September 25, 2024 and sell it today you would earn a total of  74.00  from holding Risk George Inds or generate 4.55% return on investment over 90 days.

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

Risk George Inds  vs.  Burnham Holdings

Risk George Inds

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Risk George Inds are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Risk George sustained solid returns over the last few months and may actually be approaching a breakup point.

Burnham Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Burnham Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Risk George and Burnham Holdings

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

The idea behind Risk George Inds and Burnham 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 CEOs Directory module to screen CEOs from public companies around the world.