Correlation Between Bank Central and American Acquisition
Can any of the company-specific risk be diversified away by investing in both Bank Central and American Acquisition 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 American Acquisition 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 American Acquisition Opportunity, you can compare the effects of market volatilities on Bank Central and American Acquisition 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 American Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and American Acquisition.
Diversification Opportunities for Bank Central and American Acquisition
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and American is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and American Acquisition Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Acquisition 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 American Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Acquisition has no effect on the direction of Bank Central i.e., Bank Central and American Acquisition go up and down completely randomly.
Pair Corralation between Bank Central and American Acquisition
Assuming the 90 days horizon Bank Central is expected to generate 1.72 times less return on investment than American Acquisition. In addition to that, Bank Central is 2.28 times more volatile than American Acquisition Opportunity. It trades about 0.02 of its total potential returns per unit of risk. American Acquisition Opportunity is currently generating about 0.09 per unit of volatility. If you would invest 1,008 in American Acquisition Opportunity on October 9, 2024 and sell it today you would earn a total of 74.00 from holding American Acquisition Opportunity or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 26.26% |
| Values | Daily Returns |
Bank Central Asia vs. American Acquisition Opportuni
Performance |
| Timeline |
| Bank Central Asia |
| American Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank Central and American Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and American Acquisition
The main advantage of trading using opposite Bank Central and American Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, American Acquisition 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 American Acquisition will offset losses from the drop in American Acquisition'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 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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