Correlation Between Bank Central and Trisura Group
Can any of the company-specific risk be diversified away by investing in both Bank Central and Trisura Group 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 Trisura Group 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 Trisura Group, you can compare the effects of market volatilities on Bank Central and Trisura Group 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 Trisura Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Trisura Group.
Diversification Opportunities for Bank Central and Trisura Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Trisura is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Trisura Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trisura Group 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 Trisura Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trisura Group has no effect on the direction of Bank Central i.e., Bank Central and Trisura Group go up and down completely randomly.
Pair Corralation between Bank Central and Trisura Group
Assuming the 90 days horizon Bank Central Asia is expected to under-perform the Trisura Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 1.71 times less risky than Trisura Group. The pink sheet trades about -0.34 of its potential returns per unit of risk. The Trisura Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,427 in Trisura Group on November 29, 2024 and sell it today you would lose (56.00) from holding Trisura Group or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Trisura Group
Performance |
| Timeline |
| Bank Central Asia |
| Trisura Group |
Bank Central and Trisura Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Trisura Group
The main advantage of trading using opposite Bank Central and Trisura Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Trisura Group 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 Trisura Group will offset losses from the drop in Trisura Group's long position.| Bank Central vs. HDFC Bank Limited | Bank Central vs. China Merchants Bank | Bank Central vs. China Merchants Bank | Bank Central vs. Fifth Third Bancorp |
| Trisura Group vs. James River Group | Trisura Group vs. ICC Holdings | Trisura Group vs. AMERISAFE | Trisura Group vs. Employers Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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