Correlation Between Food Life and BANK CENTRAL

Can any of the company-specific risk be diversified away by investing in both Food Life and BANK CENTRAL 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 Food Life and BANK CENTRAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Food Life Companies and BANK CENTRAL ASIA, you can compare the effects of market volatilities on Food Life and BANK CENTRAL 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 Food Life with a short position of BANK CENTRAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and BANK CENTRAL.

Diversification Opportunities for Food Life and BANK CENTRAL

-0.81

Correlation Coefficient

Food Life  BANK CENTRAL

Pay attention - limited upside

The 3 months correlation between Food and BANK is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and BANK CENTRAL ASIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CENTRAL ASIA and Food Life 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 Food Life Companies are associated (or correlated) with BANK CENTRAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CENTRAL ASIA has no effect on the direction of Food Life i.e., Food Life and BANK CENTRAL go up and down completely randomly.

Pair Corralation between Food Life and BANK CENTRAL

Assuming the 90 days horizon Food Life Companies is expected to generate 2.22 times more return on investment than BANK CENTRAL. However, Food Life is 2.22 times more volatile than BANK CENTRAL ASIA. It trades about 0.19 of its potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about -0.2 per unit of risk. If you would invest  2,000  in Food Life Companies on December 28, 2024 and sell it today you would earn a total of  760.00  from holding Food Life Companies or generate 38.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Food Life Companies  vs.  BANK CENTRAL ASIA

Food Life Companies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Food Life Companies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Food Life reported solid returns over the last few months and may actually be approaching a breakup point.

BANK CENTRAL ASIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK CENTRAL ASIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Food Life and BANK CENTRAL

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

The idea behind Food Life Companies and BANK CENTRAL ASIA 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.