Correlation Between Food Life and BANK CENTRAL
Can any of the company-specific risk be diversified away by investing in both Food Life and BANK CENTRAL 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 Food Life and BANK CENTRAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Life Companies and BANK CENTRAL ASIA, you can compare the effects of market volatilities on Food Life and BANK CENTRAL 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 Food Life with a short position of BANK CENTRAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and BANK CENTRAL.
Diversification Opportunities for Food Life and BANK CENTRAL
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Food and BANK is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and BANK CENTRAL ASIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CENTRAL ASIA and Food Life 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 Food Life Companies are associated (or correlated) with BANK CENTRAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CENTRAL ASIA has no effect on the direction of Food Life i.e., Food Life and BANK CENTRAL go up and down completely randomly.
Pair Corralation between Food Life and BANK CENTRAL
Assuming the 90 days horizon Food Life Companies is expected to generate 1.09 times more return on investment than BANK CENTRAL. However, Food Life is 1.09 times more volatile than BANK CENTRAL ASIA. It trades about 0.28 of its potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about -0.08 per unit of risk. If you would invest 1,780 in Food Life Companies on September 13, 2024 and sell it today you would earn a total of 420.00 from holding Food Life Companies or generate 23.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. BANK CENTRAL ASIA
Performance |
| Timeline |
| Food Life Companies |
| BANK CENTRAL ASIA |
Food Life and BANK CENTRAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and BANK CENTRAL
The main advantage of trading using opposite Food Life and BANK CENTRAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, BANK CENTRAL 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 BANK CENTRAL will offset losses from the drop in BANK CENTRAL's long position.| Food Life vs. Starbucks | Food Life vs. Superior Plus Corp | Food Life vs. SIVERS SEMICONDUCTORS AB | Food Life vs. NorAm Drilling AS |
| BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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