Correlation Between Bank Central and Legible
Can any of the company-specific risk be diversified away by investing in both Bank Central and Legible 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 Legible 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 Legible, you can compare the effects of market volatilities on Bank Central and Legible 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 Legible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Legible.
Diversification Opportunities for Bank Central and Legible
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Legible is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Legible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legible 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 Legible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legible has no effect on the direction of Bank Central i.e., Bank Central and Legible go up and down completely randomly.
Pair Corralation between Bank Central and Legible
Assuming the 90 days horizon Bank Central is expected to generate 19.58 times less return on investment than Legible. But when comparing it to its historical volatility, Bank Central Asia is 8.31 times less risky than Legible. It trades about 0.02 of its potential returns per unit of risk. Legible is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Legible on August 31, 2024 and sell it today you would lose (4.40) from holding Legible or give up 48.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Bank Central Asia vs. Legible
Performance |
| Timeline |
| Bank Central Asia |
| Legible |
Bank Central and Legible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Legible
The main advantage of trading using opposite Bank Central and Legible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Legible 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 Legible will offset losses from the drop in Legible'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 |
| Legible vs. Slate Office REIT | Legible vs. HUMANA INC | Legible vs. Aquagold International | Legible vs. Barloworld Ltd ADR |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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