Correlation Between BANK CENTRAL and MSA Safety
Can any of the company-specific risk be diversified away by investing in both BANK CENTRAL and MSA Safety 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 MSA Safety 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 MSA Safety Incorporated, you can compare the effects of market volatilities on BANK CENTRAL and MSA Safety 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 MSA Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK CENTRAL and MSA Safety.
Diversification Opportunities for BANK CENTRAL and MSA Safety
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and MSA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and MSA Safety Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety 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 MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and MSA Safety go up and down completely randomly.
Pair Corralation between BANK CENTRAL and MSA Safety
Assuming the 90 days trading horizon BANK CENTRAL is expected to generate 1.67 times less return on investment than MSA Safety. But when comparing it to its historical volatility, BANK CENTRAL ASIA is 1.3 times less risky than MSA Safety. It trades about 0.03 of its potential returns per unit of risk. MSA Safety Incorporated is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11,603 in MSA Safety Incorporated on October 16, 2024 and sell it today you would earn a total of 3,697 from holding MSA Safety Incorporated or generate 31.86% 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. MSA Safety Incorporated
Performance |
| Timeline |
| BANK CENTRAL ASIA |
| MSA Safety |
BANK CENTRAL and MSA Safety Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK CENTRAL and MSA Safety
The main advantage of trading using opposite BANK CENTRAL and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK CENTRAL position performs unexpectedly, MSA Safety 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 MSA Safety will offset losses from the drop in MSA Safety's long position.| BANK CENTRAL vs. Hua Hong Semiconductor | BANK CENTRAL vs. BE Semiconductor Industries | BANK CENTRAL vs. Tower Semiconductor | BANK CENTRAL vs. MPH Health Care |
| MSA Safety vs. Take Two Interactive Software | MSA Safety vs. VITEC SOFTWARE GROUP | MSA Safety vs. Cars Inc | MSA Safety vs. Guangdong Investment Limited |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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