Correlation Between Chiba Bank and Star Holdings
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and Star Holdings 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 Star Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank Ltd and Star Holdings, you can compare the effects of market volatilities on Chiba Bank and Star Holdings 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 Star Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and Star Holdings.
Diversification Opportunities for Chiba Bank and Star Holdings
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chiba and Star is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank Ltd and Star Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Holdings 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 Ltd are associated (or correlated) with Star Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Holdings has no effect on the direction of Chiba Bank i.e., Chiba Bank and Star Holdings go up and down completely randomly.
Pair Corralation between Chiba Bank and Star Holdings
Assuming the 90 days horizon Chiba Bank Ltd is expected to generate 1.26 times more return on investment than Star Holdings. However, Chiba Bank is 1.26 times more volatile than Star Holdings. It trades about 0.02 of its potential returns per unit of risk. Star Holdings is currently generating about -0.04 per unit of risk. If you would invest 3,738 in Chiba Bank Ltd on August 27, 2024 and sell it today you would earn a total of 30.00 from holding Chiba Bank Ltd or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.31% |
| Values | Daily Returns |
Chiba Bank Ltd vs. Star Holdings
Performance |
| Timeline |
| Chiba Bank |
| Star Holdings |
Chiba Bank and Star Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and Star Holdings
The main advantage of trading using opposite Chiba Bank and Star Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, Star Holdings 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 Star Holdings will offset losses from the drop in Star Holdings' long position.| Chiba Bank vs. First Hawaiian | Chiba Bank vs. Central Pacific Financial | Chiba Bank vs. Territorial Bancorp | Chiba Bank vs. Comerica |
| Star Holdings vs. Freedom Bank of | Star Holdings vs. Fomento Economico Mexicano | Star Holdings vs. SNDL Inc | Star Holdings vs. Chiba Bank Ltd |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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