Correlation Between BANK CENTRAL and North American
Can any of the company-specific risk be diversified away by investing in both BANK CENTRAL and North American 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 North American 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 North American Construction, you can compare the effects of market volatilities on BANK CENTRAL and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK CENTRAL and North American.
Diversification Opportunities for BANK CENTRAL and North American
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and North is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and North American go up and down completely randomly.
Pair Corralation between BANK CENTRAL and North American
Assuming the 90 days trading horizon BANK CENTRAL is expected to generate 2.83 times less return on investment than North American. But when comparing it to its historical volatility, BANK CENTRAL ASIA is 1.89 times less risky than North American. It trades about 0.02 of its potential returns per unit of risk. North American Construction is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,501 in North American Construction on August 24, 2024 and sell it today you would earn a total of 299.00 from holding North American Construction or generate 19.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK CENTRAL ASIA vs. North American Construction
Performance |
| Timeline |
| BANK CENTRAL ASIA |
| North American Const |
BANK CENTRAL and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK CENTRAL and North American
The main advantage of trading using opposite BANK CENTRAL and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK CENTRAL position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc |
| North American vs. ELMOS SEMICONDUCTOR | North American vs. Sumitomo Mitsui Construction | North American vs. Magnachip Semiconductor | North American vs. Tower Semiconductor |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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