Correlation Between Bank Central and Starfleet Innotech
Can any of the company-specific risk be diversified away by investing in both Bank Central and Starfleet Innotech 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 Starfleet Innotech 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 Starfleet Innotech, you can compare the effects of market volatilities on Bank Central and Starfleet Innotech 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 Starfleet Innotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Starfleet Innotech.
Diversification Opportunities for Bank Central and Starfleet Innotech
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Starfleet is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Starfleet Innotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starfleet Innotech 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 Starfleet Innotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starfleet Innotech has no effect on the direction of Bank Central i.e., Bank Central and Starfleet Innotech go up and down completely randomly.
Pair Corralation between Bank Central and Starfleet Innotech
Assuming the 90 days horizon Bank Central is expected to generate 8.66 times less return on investment than Starfleet Innotech. But when comparing it to its historical volatility, Bank Central Asia is 8.33 times less risky than Starfleet Innotech. It trades about 0.03 of its potential returns per unit of risk. Starfleet Innotech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.94 in Starfleet Innotech on August 28, 2024 and sell it today you would lose (0.58) from holding Starfleet Innotech or give up 61.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Starfleet Innotech
Performance |
| Timeline |
| Bank Central Asia |
| Starfleet Innotech |
Bank Central and Starfleet Innotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Starfleet Innotech
The main advantage of trading using opposite Bank Central and Starfleet Innotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Starfleet Innotech 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 Starfleet Innotech will offset losses from the drop in Starfleet Innotech's long position.The idea behind Bank Central Asia and Starfleet Innotech pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Starfleet Innotech vs. Blackstone Group | Starfleet Innotech vs. BlackRock | Starfleet Innotech vs. Apollo Global Management | Starfleet Innotech vs. Bank of New |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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