Correlation Between Viva Leisure and BNK Banking

Can any of the company-specific risk be diversified away by investing in both Viva Leisure and BNK Banking 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 Viva Leisure and BNK Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Viva Leisure and BNK Banking

0.05

Correlation Coefficient

Viva Leisure  BNK Banking

Significant diversification

The 3 months correlation between Viva and BNK is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Viva Leisure and BNK Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Banking and Viva Leisure 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 Viva Leisure are associated (or correlated) with BNK Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Banking has no effect on the direction of Viva Leisure i.e., Viva Leisure and BNK Banking go up and down completely randomly.

Pair Corralation between Viva Leisure and BNK Banking

Assuming the 90 days trading horizon Viva Leisure is expected to under-perform the BNK Banking. But the stock apears to be less risky and, when comparing its historical volatility, Viva Leisure is 1.6 times less risky than BNK Banking. The stock trades about -0.11 of its potential returns per unit of risk. The BNK Banking is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  33.00  in BNK Banking on December 28, 2024 and sell it today you would lose (4.00) from holding BNK Banking or give up 12.12% of portfolio value over 90 days.

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

Viva Leisure  vs.  BNK Banking

Viva Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viva Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BNK Banking

Risk-Adjusted Performance

Very Weak

Over the last 90 days BNK Banking has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Viva Leisure and BNK Banking

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

The idea behind Viva Leisure and BNK Banking 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.