Correlation Between Bank Central and Teijin
Can any of the company-specific risk be diversified away by investing in both Bank Central and Teijin 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 Teijin 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 Teijin, you can compare the effects of market volatilities on Bank Central and Teijin 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 Teijin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Teijin.
Diversification Opportunities for Bank Central and Teijin
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Teijin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Teijin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teijin 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 Teijin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teijin has no effect on the direction of Bank Central i.e., Bank Central and Teijin go up and down completely randomly.
Pair Corralation between Bank Central and Teijin
Assuming the 90 days horizon Bank Central Asia is expected to generate 0.56 times more return on investment than Teijin. However, Bank Central Asia is 1.77 times less risky than Teijin. It trades about 0.03 of its potential returns per unit of risk. Teijin is currently generating about 0.0 per unit of risk. If you would invest 1,408 in Bank Central Asia on August 26, 2024 and sell it today you would earn a total of 142.00 from holding Bank Central Asia or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 83.53% |
| Values | Daily Returns |
Bank Central Asia vs. Teijin
Performance |
| Timeline |
| Bank Central Asia |
| Teijin |
Bank Central and Teijin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Teijin
The main advantage of trading using opposite Bank Central and Teijin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Teijin 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 Teijin will offset losses from the drop in Teijin's long position.| Bank Central vs. PSB Holdings | Bank Central vs. United Overseas Bank | Bank Central vs. Turkiye Garanti Bankasi |
| Teijin vs. Toray Industries ADR | Teijin vs. Nitto Denko Corp | Teijin vs. NSK Ltd ADR | Teijin vs. Secom Co Ltd |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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