Correlation Between BANK CENTRAL and VERU INC

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Can any of the company-specific risk be diversified away by investing in both BANK CENTRAL and VERU INC 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 VERU INC 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 VERU INC DL 01, you can compare the effects of market volatilities on BANK CENTRAL and VERU INC 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 VERU INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK CENTRAL and VERU INC.

Diversification Opportunities for BANK CENTRAL and VERU INC

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between BANK and VERU is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and VERU INC DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERU INC DL 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 VERU INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERU INC DL has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and VERU INC go up and down completely randomly.

Pair Corralation between BANK CENTRAL and VERU INC

Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to generate 0.2 times more return on investment than VERU INC. However, BANK CENTRAL ASIA is 4.97 times less risky than VERU INC. It trades about 0.29 of its potential returns per unit of risk. VERU INC DL 01 is currently generating about -0.08 per unit of risk. If you would invest  59.00  in BANK CENTRAL ASIA on September 25, 2024 and sell it today you would earn a total of  3.00  from holding BANK CENTRAL ASIA or generate 5.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

BANK CENTRAL ASIA  vs.  VERU INC DL 01

 Performance 
       Timeline  
BANK CENTRAL ASIA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BANK CENTRAL ASIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BANK CENTRAL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
VERU INC DL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days VERU INC DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VERU INC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BANK CENTRAL and VERU INC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BANK CENTRAL and VERU INC

The main advantage of trading using opposite BANK CENTRAL and VERU INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK CENTRAL position performs unexpectedly, VERU INC 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 VERU INC will offset losses from the drop in VERU INC's long position.
The idea behind BANK CENTRAL ASIA and VERU INC DL 01 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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