Correlation Between Centaur Bci and Custodian BCI

Can any of the company-specific risk be diversified away by investing in both Centaur Bci and Custodian BCI 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 Centaur Bci and Custodian BCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Centaur Bci Balanced and Custodian BCI Balanced, you can compare the effects of market volatilities on Centaur Bci and Custodian BCI 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 Centaur Bci with a short position of Custodian BCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Bci and Custodian BCI.

Diversification Opportunities for Centaur Bci and Custodian BCI

0.91

Correlation Coefficient

Centaur Bci  Custodian BCI

Almost no diversification

The 3 months correlation between Centaur and Custodian is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Bci Balanced and Custodian BCI Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custodian BCI Balanced and Centaur Bci 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 Centaur Bci Balanced are associated (or correlated) with Custodian BCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custodian BCI Balanced has no effect on the direction of Centaur Bci i.e., Centaur Bci and Custodian BCI go up and down completely randomly.

Pair Corralation between Centaur Bci and Custodian BCI

Assuming the 90 days trading horizon Centaur Bci Balanced is expected to generate 1.09 times more return on investment than Custodian BCI. However, Centaur Bci is 1.09 times more volatile than Custodian BCI Balanced. It trades about 0.21 of its potential returns per unit of risk. Custodian BCI Balanced is currently generating about 0.21 per unit of risk. If you would invest  230.00  in Centaur Bci Balanced on September 5, 2024 and sell it today you would earn a total of  14.00  from holding Centaur Bci Balanced or generate 6.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Centaur Bci Balanced  vs.  Custodian BCI Balanced

Centaur Bci Balanced

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Bci Balanced are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Centaur Bci is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Custodian BCI Balanced

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Custodian BCI Balanced are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Custodian BCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Centaur Bci and Custodian BCI

The main advantage of trading using opposite Centaur Bci and Custodian BCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaur Bci position performs unexpectedly, Custodian BCI 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 Custodian BCI will offset losses from the drop in Custodian BCI's long position.

The idea behind Centaur Bci Balanced and Custodian BCI Balanced 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.