Correlation Between Bank Central and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both Bank Central and Farmers Bank 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 Farmers Bank 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 The Farmers Bank, you can compare the effects of market volatilities on Bank Central and Farmers Bank 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 Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Farmers Bank.
Diversification Opportunities for Bank Central and Farmers Bank
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Farmers is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank 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 Farmers Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bank has no effect on the direction of Bank Central i.e., Bank Central and Farmers Bank go up and down completely randomly.
Pair Corralation between Bank Central and Farmers Bank
Assuming the 90 days horizon Bank Central Asia is expected to generate 0.6 times more return on investment than Farmers Bank. However, Bank Central Asia is 1.66 times less risky than Farmers Bank. It trades about 0.01 of its potential returns per unit of risk. The Farmers Bank is currently generating about 0.0 per unit of risk. If you would invest 1,393 in Bank Central Asia on November 2, 2024 and sell it today you would earn a total of 27.00 from holding Bank Central Asia or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.52% |
| Values | Daily Returns |
Bank Central Asia vs. The Farmers Bank
Performance |
| Timeline |
| Bank Central Asia |
| Farmers Bank |
Bank Central and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Farmers Bank
The main advantage of trading using opposite Bank Central and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Farmers Bank 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 Farmers Bank will offset losses from the drop in Farmers Bank'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 |
| Farmers Bank vs. CIB Marine Bancshares | Farmers Bank vs. F M Bank | Farmers Bank vs. ENB Financial Corp | Farmers Bank vs. First Bankers Trustshares |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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