Correlation Between BANK CENTRAL and ADT
Can any of the company-specific risk be diversified away by investing in both BANK CENTRAL and ADT 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 ADT 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 ADT Inc, you can compare the effects of market volatilities on BANK CENTRAL and ADT 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 ADT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK CENTRAL and ADT.
Diversification Opportunities for BANK CENTRAL and ADT
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BANK and ADT is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and ADT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADT Inc 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 ADT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADT Inc has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and ADT go up and down completely randomly.
Pair Corralation between BANK CENTRAL and ADT
Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to generate 0.46 times more return on investment than ADT. However, BANK CENTRAL ASIA is 2.17 times less risky than ADT. It trades about 0.03 of its potential returns per unit of risk. ADT Inc is currently generating about 0.01 per unit of risk. If you would invest 50.00 in BANK CENTRAL ASIA on October 16, 2024 and sell it today you would earn a total of 9.00 from holding BANK CENTRAL ASIA or generate 18.0% 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. ADT Inc
Performance |
| Timeline |
| BANK CENTRAL ASIA |
| ADT Inc |
BANK CENTRAL and ADT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK CENTRAL and ADT
The main advantage of trading using opposite BANK CENTRAL and ADT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK CENTRAL position performs unexpectedly, ADT 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 ADT will offset losses from the drop in ADT's long position.| BANK CENTRAL vs. OFFICE DEPOT | BANK CENTRAL vs. Planet Fitness | BANK CENTRAL vs. HEALTHSTREAM | BANK CENTRAL vs. Siemens Healthineers AG |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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