Correlation Between Bank Central and Urbana
Can any of the company-specific risk be diversified away by investing in both Bank Central and Urbana 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 Urbana 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 Urbana, you can compare the effects of market volatilities on Bank Central and Urbana 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 Urbana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Urbana.
Diversification Opportunities for Bank Central and Urbana
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Urbana is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Urbana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urbana 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 Urbana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urbana has no effect on the direction of Bank Central i.e., Bank Central and Urbana go up and down completely randomly.
Pair Corralation between Bank Central and Urbana
Assuming the 90 days horizon Bank Central Asia is expected to under-perform the Urbana. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 1.06 times less risky than Urbana. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Urbana is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 387.00 in Urbana on August 31, 2024 and sell it today you would earn a total of 16.00 from holding Urbana or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Urbana
Performance |
| Timeline |
| Bank Central Asia |
| Urbana |
Bank Central and Urbana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Urbana
The main advantage of trading using opposite Bank Central and Urbana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Urbana 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 Urbana will offset losses from the drop in Urbana'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 |
| Urbana vs. Blackhawk Growth Corp | Urbana vs. Guardian Capital Group | Urbana vs. Flow Capital Corp | Urbana vs. Princeton Capital |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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