Correlation Between Bank Central and JBS SA
Can any of the company-specific risk be diversified away by investing in both Bank Central and JBS SA 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 JBS SA 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 JBS SA, you can compare the effects of market volatilities on Bank Central and JBS SA 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 JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and JBS SA.
Diversification Opportunities for Bank Central and JBS SA
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and JBS is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Bank Central i.e., Bank Central and JBS SA go up and down completely randomly.
Pair Corralation between Bank Central and JBS SA
Assuming the 90 days horizon Bank Central Asia is expected to under-perform the JBS SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 1.77 times less risky than JBS SA. The pink sheet trades about -0.15 of its potential returns per unit of risk. The JBS SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,095 in JBS SA on January 7, 2025 and sell it today you would earn a total of 281.00 from holding JBS SA or generate 25.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank Central Asia vs. JBS SA
Performance |
| Timeline |
| Bank Central Asia |
| JBS SA |
Bank Central and JBS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and JBS SA
The main advantage of trading using opposite Bank Central and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, JBS SA 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 JBS SA will offset losses from the drop in JBS SA's long position.| Bank Central vs. Banco Bradesco SA | Bank Central vs. Itau Unibanco Banco | Bank Central vs. Lloyds Banking Group | Bank Central vs. Deutsche Bank AG |
| JBS SA vs. BRF SA ADR | JBS SA vs. Natures Sunshine Products | JBS SA vs. Marfrig Global Foods | JBS SA vs. Bridgford Foods |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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