Correlation Between Bank Central and Jardine Matheson
Can any of the company-specific risk be diversified away by investing in both Bank Central and Jardine Matheson 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 Jardine Matheson 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 Jardine Matheson Holdings, you can compare the effects of market volatilities on Bank Central and Jardine Matheson 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 Jardine Matheson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Jardine Matheson.
Diversification Opportunities for Bank Central and Jardine Matheson
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Jardine is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings 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 Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of Bank Central i.e., Bank Central and Jardine Matheson go up and down completely randomly.
Pair Corralation between Bank Central and Jardine Matheson
Assuming the 90 days horizon Bank Central Asia is expected to under-perform the Jardine Matheson. In addition to that, Bank Central is 1.1 times more volatile than Jardine Matheson Holdings. It trades about -0.22 of its total potential returns per unit of risk. Jardine Matheson Holdings is currently generating about 0.47 per unit of volatility. If you would invest 3,832 in Jardine Matheson Holdings on September 1, 2024 and sell it today you would earn a total of 505.00 from holding Jardine Matheson Holdings or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Jardine Matheson Holdings
Performance |
| Timeline |
| Bank Central Asia |
| Jardine Matheson Holdings |
Bank Central and Jardine Matheson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Jardine Matheson
The main advantage of trading using opposite Bank Central and Jardine Matheson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Jardine Matheson 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 Jardine Matheson will offset losses from the drop in Jardine Matheson's long position.| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central vs. Uwharrie Capital Corp |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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