Correlation Between BANK CENTRAL and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both BANK CENTRAL and IMPERIAL TOBACCO 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 BANK CENTRAL and IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK CENTRAL ASIA and IMPERIAL TOBACCO , you can compare the effects of market volatilities on BANK CENTRAL and IMPERIAL TOBACCO 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 BANK CENTRAL with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK CENTRAL and IMPERIAL TOBACCO.
Diversification Opportunities for BANK CENTRAL and IMPERIAL TOBACCO
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and IMPERIAL is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and BANK CENTRAL 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 BANK CENTRAL ASIA are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between BANK CENTRAL and IMPERIAL TOBACCO
Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to under-perform the IMPERIAL TOBACCO. In addition to that, BANK CENTRAL is 1.91 times more volatile than IMPERIAL TOBACCO . It trades about -0.01 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.23 per unit of volatility. If you would invest 2,812 in IMPERIAL TOBACCO on October 19, 2024 and sell it today you would earn a total of 261.00 from holding IMPERIAL TOBACCO or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK CENTRAL ASIA vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| BANK CENTRAL ASIA |
| IMPERIAL TOBACCO |
BANK CENTRAL and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK CENTRAL and IMPERIAL TOBACCO
The main advantage of trading using opposite BANK CENTRAL and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK CENTRAL position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc |
| IMPERIAL TOBACCO vs. Kingdee International Software | IMPERIAL TOBACCO vs. USWE SPORTS AB | IMPERIAL TOBACCO vs. Columbia Sportswear | IMPERIAL TOBACCO vs. SPORT LISBOA E |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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