Correlation Between Bank Central and ECN Capital
Can any of the company-specific risk be diversified away by investing in both Bank Central and ECN Capital 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 ECN Capital 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 ECN Capital Corp, you can compare the effects of market volatilities on Bank Central and ECN Capital 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 ECN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and ECN Capital.
Diversification Opportunities for Bank Central and ECN Capital
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and ECN is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital Corp 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 ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Bank Central i.e., Bank Central and ECN Capital go up and down completely randomly.
Pair Corralation between Bank Central and ECN Capital
Assuming the 90 days horizon Bank Central Asia is expected to generate 0.88 times more return on investment than ECN Capital. However, Bank Central Asia is 1.14 times less risky than ECN Capital. It trades about 0.12 of its potential returns per unit of risk. ECN Capital Corp is currently generating about -0.08 per unit of risk. If you would invest 1,594 in Bank Central Asia on September 14, 2024 and sell it today you would earn a total of 67.00 from holding Bank Central Asia or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. ECN Capital Corp
Performance |
| Timeline |
| Bank Central Asia |
| ECN Capital Corp |
Bank Central and ECN Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and ECN Capital
The main advantage of trading using opposite Bank Central and ECN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, ECN Capital 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 ECN Capital will offset losses from the drop in ECN Capital'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 |
| ECN Capital vs. PennyMac Finl Svcs | ECN Capital vs. Velocity Financial Llc | ECN Capital vs. Encore Capital Group | ECN Capital vs. Greystone Housing Impact |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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