Correlation Between CHIBA BANK and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both CHIBA BANK and FLOW TRADERS 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 CHIBA BANK and FLOW TRADERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHIBA BANK and FLOW TRADERS LTD, you can compare the effects of market volatilities on CHIBA BANK and FLOW TRADERS 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 CHIBA BANK with a short position of FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIBA BANK and FLOW TRADERS.
Diversification Opportunities for CHIBA BANK and FLOW TRADERS
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHIBA and FLOW is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA BANK and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD and CHIBA BANK 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 CHIBA BANK are associated (or correlated) with FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of CHIBA BANK i.e., CHIBA BANK and FLOW TRADERS go up and down completely randomly.
Pair Corralation between CHIBA BANK and FLOW TRADERS
Assuming the 90 days trading horizon CHIBA BANK is expected to generate 2.42 times less return on investment than FLOW TRADERS. But when comparing it to its historical volatility, CHIBA BANK is 1.55 times less risky than FLOW TRADERS. It trades about 0.21 of its potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,164 in FLOW TRADERS LTD on October 24, 2024 and sell it today you would earn a total of 258.00 from holding FLOW TRADERS LTD or generate 11.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHIBA BANK vs. FLOW TRADERS LTD
Performance |
| Timeline |
| CHIBA BANK |
| FLOW TRADERS LTD |
CHIBA BANK and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHIBA BANK and FLOW TRADERS
The main advantage of trading using opposite CHIBA BANK and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIBA BANK position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.The idea behind CHIBA BANK and FLOW TRADERS LTD 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.| FLOW TRADERS vs. UNIQA INSURANCE GR | FLOW TRADERS vs. Sinopec Shanghai Petrochemical | FLOW TRADERS vs. United Insurance Holdings | FLOW TRADERS vs. INDO RAMA SYNTHETIC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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