Correlation Between Centaur Bci and Transpaco

Can any of the company-specific risk be diversified away by investing in both Centaur Bci and Transpaco 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 Transpaco 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 Transpaco, you can compare the effects of market volatilities on Centaur Bci and Transpaco 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 Transpaco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Bci and Transpaco.

Diversification Opportunities for Centaur Bci and Transpaco

-0.11

Correlation Coefficient

Centaur Bci  Transpaco

Good diversification

The 3 months correlation between Centaur and Transpaco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Bci Balanced and Transpaco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transpaco 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 Transpaco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transpaco has no effect on the direction of Centaur Bci i.e., Centaur Bci and Transpaco go up and down completely randomly.

Pair Corralation between Centaur Bci and Transpaco

Assuming the 90 days trading horizon Centaur Bci is expected to generate 3.08 times less return on investment than Transpaco. But when comparing it to its historical volatility, Centaur Bci Balanced is 7.48 times less risky than Transpaco. It trades about 0.08 of its potential returns per unit of risk. Transpaco is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  252,894  in Transpaco on October 9, 2024 and sell it today you would earn a total of  72,106  from holding Transpaco or generate 28.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.78%
Values	Daily Returns

Centaur Bci Balanced  vs.  Transpaco

Centaur Bci Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaur Bci Balanced has generated negative risk-adjusted returns adding no value to fund investors. 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.

Transpaco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transpaco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Centaur Bci and Transpaco

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

The idea behind Centaur Bci Balanced and Transpaco 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.