Correlation Between Crown Asia and Bank of the
Can any of the company-specific risk be diversified away by investing in both Crown Asia and Bank of the 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 the 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 the, you can compare the effects of market volatilities on Crown Asia and Bank of the 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 the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and Bank of the.
Diversification Opportunities for Crown Asia and Bank of the
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Crown and Bank is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the 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 the. 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 the has no effect on the direction of Crown Asia i.e., Crown Asia and Bank of the go up and down completely randomly.
Pair Corralation between Crown Asia and Bank of the
Assuming the 90 days trading horizon Crown Asia Chemicals is expected to generate 1.4 times more return on investment than Bank of the. However, Crown Asia is 1.4 times more volatile than Bank of the. It trades about -0.1 of its potential returns per unit of risk. Bank of the is currently generating about -0.36 per unit of risk. If you would invest 189.00 in Crown Asia Chemicals on August 31, 2024 and sell it today you would lose (9.00) from holding Crown Asia Chemicals or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Asia Chemicals vs. Bank of the
Performance |
| Timeline |
| Crown Asia Chemicals |
| Bank of the |
Crown Asia and Bank of the Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and Bank of the
The main advantage of trading using opposite Crown Asia and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, Bank of the 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 the will offset losses from the drop in Bank of the's long position.| Crown Asia vs. Figaro Coffee Group | Crown Asia vs. Robinsons Retail Holdings | Crown Asia vs. Manila Mining Corp | Crown Asia vs. Metro Retail Stores |
| Bank of the vs. Semirara Mining Corp | Bank of the vs. Manila Mining Corp | Bank of the vs. Apex Mining Co | Bank of the vs. Prime Media Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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