Correlation Between Table Trac and Banyan Tree

Can any of the company-specific risk be diversified away by investing in both Table Trac and Banyan Tree 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 Table Trac and Banyan Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Table Trac and Banyan Tree

0.0

Correlation Coefficient

Table Trac  Banyan Tree

Pay attention - limited upside

The 3 months correlation between Table and Banyan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Table Trac and Banyan Tree Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Tree Holdings and Table Trac 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 Table Trac are associated (or correlated) with Banyan Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Tree Holdings has no effect on the direction of Table Trac i.e., Table Trac and Banyan Tree go up and down completely randomly.

Pair Corralation between Table Trac and Banyan Tree

Given the investment horizon of 90 days Table Trac is expected to generate 0.41 times more return on investment than Banyan Tree. However, Table Trac is 2.44 times less risky than Banyan Tree. It trades about 0.03 of its potential returns per unit of risk. Banyan Tree Holdings is currently generating about -0.1 per unit of risk. If you would invest  386.00  in Table Trac on December 3, 2024 and sell it today you would earn a total of  29.00  from holding Table Trac or generate 7.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	36.01%
Values	Daily Returns

Table Trac  vs.  Banyan Tree Holdings

Table Trac

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Table Trac are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Table Trac may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Banyan Tree Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banyan Tree Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Banyan Tree is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Table Trac and Banyan Tree

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

The idea behind Table Trac and Banyan Tree 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.