Correlation Between Chiba Bank and CENTRAL PUERTO
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and CENTRAL PUERTO 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 CENTRAL PUERTO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and CENTRAL PUERTO ADR1, you can compare the effects of market volatilities on Chiba Bank and CENTRAL PUERTO 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 CENTRAL PUERTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and CENTRAL PUERTO.
Diversification Opportunities for Chiba Bank and CENTRAL PUERTO
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chiba and CENTRAL is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and CENTRAL PUERTO ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRAL PUERTO ADR1 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 CENTRAL PUERTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRAL PUERTO ADR1 has no effect on the direction of Chiba Bank i.e., Chiba Bank and CENTRAL PUERTO go up and down completely randomly.
Pair Corralation between Chiba Bank and CENTRAL PUERTO
Assuming the 90 days horizon Chiba Bank is expected to generate 1.95 times less return on investment than CENTRAL PUERTO. But when comparing it to its historical volatility, Chiba Bank is 1.38 times less risky than CENTRAL PUERTO. It trades about 0.24 of its potential returns per unit of risk. CENTRAL PUERTO ADR1 is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,153 in CENTRAL PUERTO ADR1 on September 14, 2024 and sell it today you would earn a total of 227.00 from holding CENTRAL PUERTO ADR1 or generate 19.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank vs. CENTRAL PUERTO ADR1
Performance |
| Timeline |
| Chiba Bank |
| CENTRAL PUERTO ADR1 |
Chiba Bank and CENTRAL PUERTO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and CENTRAL PUERTO
The main advantage of trading using opposite Chiba Bank and CENTRAL PUERTO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, CENTRAL PUERTO 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 CENTRAL PUERTO will offset losses from the drop in CENTRAL PUERTO's long position.The idea behind Chiba Bank and CENTRAL PUERTO ADR1 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.| CENTRAL PUERTO vs. Eidesvik Offshore ASA | CENTRAL PUERTO vs. ECHO INVESTMENT ZY | CENTRAL PUERTO vs. REGAL ASIAN INVESTMENTS | CENTRAL PUERTO vs. REINET INVESTMENTS SCA |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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