Correlation Between Bank Central and ALJ Regional
Can any of the company-specific risk be diversified away by investing in both Bank Central and ALJ Regional 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 Bank Central and ALJ Regional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and ALJ Regional Holdings, you can compare the effects of market volatilities on Bank Central and ALJ Regional 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 Bank Central with a short position of ALJ Regional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and ALJ Regional.
Diversification Opportunities for Bank Central and ALJ Regional
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and ALJ is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and ALJ Regional Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALJ Regional Holdings and Bank Central 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 Bank Central Asia are associated (or correlated) with ALJ Regional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALJ Regional Holdings has no effect on the direction of Bank Central i.e., Bank Central and ALJ Regional go up and down completely randomly.
Pair Corralation between Bank Central and ALJ Regional
Assuming the 90 days horizon Bank Central is expected to generate 3.34 times less return on investment than ALJ Regional. But when comparing it to its historical volatility, Bank Central Asia is 1.73 times less risky than ALJ Regional. It trades about 0.03 of its potential returns per unit of risk. ALJ Regional Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 190.00 in ALJ Regional Holdings on August 31, 2024 and sell it today you would earn a total of 9.00 from holding ALJ Regional Holdings or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 8.28% |
| Values | Daily Returns |
Bank Central Asia vs. ALJ Regional Holdings
Performance |
| Timeline |
| Bank Central Asia |
| ALJ Regional Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank Central and ALJ Regional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and ALJ Regional
The main advantage of trading using opposite Bank Central and ALJ Regional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, ALJ Regional 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 ALJ Regional will offset losses from the drop in ALJ Regional's long position.| Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
| ALJ Regional vs. Dexterra Group | ALJ Regional vs. Intertek Group Plc | ALJ Regional vs. Wildpack Beverage | ALJ Regional vs. DATA Communications Management |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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