Correlation Between Bank Central and DIAGNOS
Can any of the company-specific risk be diversified away by investing in both Bank Central and DIAGNOS 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 DIAGNOS 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 DIAGNOS, you can compare the effects of market volatilities on Bank Central and DIAGNOS 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 DIAGNOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and DIAGNOS.
Diversification Opportunities for Bank Central and DIAGNOS
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and DIAGNOS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and DIAGNOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIAGNOS 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 DIAGNOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIAGNOS has no effect on the direction of Bank Central i.e., Bank Central and DIAGNOS go up and down completely randomly.
Pair Corralation between Bank Central and DIAGNOS
Assuming the 90 days horizon Bank Central is expected to generate 3.51 times less return on investment than DIAGNOS. But when comparing it to its historical volatility, Bank Central Asia is 4.07 times less risky than DIAGNOS. It trades about 0.03 of its potential returns per unit of risk. DIAGNOS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 22.00 in DIAGNOS on October 7, 2024 and sell it today you would lose (1.00) from holding DIAGNOS or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. DIAGNOS
Performance |
| Timeline |
| Bank Central Asia |
| DIAGNOS |
Bank Central and DIAGNOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and DIAGNOS
The main advantage of trading using opposite Bank Central and DIAGNOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, DIAGNOS 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 DIAGNOS will offset losses from the drop in DIAGNOS'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 |
| DIAGNOS vs. Cogstate Limited | DIAGNOS vs. Cognetivity Neurosciences | DIAGNOS vs. CareMax | DIAGNOS vs. Mednow Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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