Correlation Between Crown Asia and Bank of Commerce
Can any of the company-specific risk be diversified away by investing in both Crown Asia and Bank of Commerce 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 Crown Asia and Bank of Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Asia Chemicals and Bank of Commerce, you can compare the effects of market volatilities on Crown Asia and Bank of Commerce 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 Crown Asia with a short position of Bank of Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and Bank of Commerce.
Diversification Opportunities for Crown Asia and Bank of Commerce
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Crown and Bank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Bank of Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Commerce and Crown Asia 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 Crown Asia Chemicals are associated (or correlated) with Bank of Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Commerce has no effect on the direction of Crown Asia i.e., Crown Asia and Bank of Commerce go up and down completely randomly.
Pair Corralation between Crown Asia and Bank of Commerce
Assuming the 90 days trading horizon Crown Asia is expected to generate 2.16 times less return on investment than Bank of Commerce. But when comparing it to its historical volatility, Crown Asia Chemicals is 1.24 times less risky than Bank of Commerce. It trades about 0.05 of its potential returns per unit of risk. Bank of Commerce is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 675.00 in Bank of Commerce on October 26, 2024 and sell it today you would earn a total of 30.00 from holding Bank of Commerce or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Crown Asia Chemicals vs. Bank of Commerce
Performance |
| Timeline |
| Crown Asia Chemicals |
| Bank of Commerce |
Crown Asia and Bank of Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and Bank of Commerce
The main advantage of trading using opposite Crown Asia and Bank of Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, Bank of Commerce 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 Bank of Commerce will offset losses from the drop in Bank of Commerce's long position.| Crown Asia vs. Metropolitan Bank Trust | Crown Asia vs. Lepanto Consolidated Mining | Crown Asia vs. National Reinsurance | Crown Asia vs. Philippine Business Bank |
| Bank of Commerce vs. Crown Asia Chemicals | Bank of Commerce vs. Jollibee Foods Corp | Bank of Commerce vs. Asia United Bank | Bank of Commerce vs. Rizal Commercial Banking |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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