Correlation Between WB Burgers and GIB Capital

Can any of the company-specific risk be diversified away by investing in both WB Burgers and GIB Capital 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 WB Burgers and GIB Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WB Burgers Asia and GIB Capital Group, you can compare the effects of market volatilities on WB Burgers and GIB Capital 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 WB Burgers with a short position of GIB Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of WB Burgers and GIB Capital.

Diversification Opportunities for WB Burgers and GIB Capital

0.24

Correlation Coefficient

WB Burgers  GIB Capital

Modest diversification

The 3 months correlation between WBBA and GIB is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding WB Burgers Asia and GIB Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIB Capital Group and WB Burgers 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 WB Burgers Asia are associated (or correlated) with GIB Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIB Capital Group has no effect on the direction of WB Burgers i.e., WB Burgers and GIB Capital go up and down completely randomly.

Pair Corralation between WB Burgers and GIB Capital

If you would invest  0.11  in GIB Capital Group on October 8, 2024 and sell it today you would earn a total of  0.09  from holding GIB Capital Group or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

WB Burgers Asia  vs.  GIB Capital Group

WB Burgers Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WB Burgers Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, WB Burgers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GIB Capital Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GIB Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, GIB Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WB Burgers and GIB Capital

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

The idea behind WB Burgers Asia and GIB Capital 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.