Correlation Between ALEFARM BREWING and BANK CENTRAL

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

By analyzing existing cross correlation between ALEFARM BREWING DK 05 and BANK CENTRAL ASIA, you can compare the effects of market volatilities on ALEFARM BREWING 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 ALEFARM BREWING with a short position of BANK CENTRAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and BANK CENTRAL.

Diversification Opportunities for ALEFARM BREWING and BANK CENTRAL

0.4

Correlation Coefficient

ALEFARM BREWING  BANK CENTRAL

Very weak diversification

The 3 months correlation between ALEFARM and BANK is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 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 ALEFARM BREWING 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 ALEFARM BREWING DK 05 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 ALEFARM BREWING i.e., ALEFARM BREWING and BANK CENTRAL go up and down completely randomly.

Pair Corralation between ALEFARM BREWING and BANK CENTRAL

Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to under-perform the BANK CENTRAL. In addition to that, ALEFARM BREWING is 2.41 times more volatile than BANK CENTRAL ASIA. It trades about -0.12 of its total potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about 0.01 per unit of volatility. If you would invest  59.00  in BANK CENTRAL ASIA on October 4, 2024 and sell it today you would earn a total of  0.00  from holding BANK CENTRAL ASIA or generate 0.0% return on investment over 90 days.

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

ALEFARM BREWING DK 05  vs.  BANK CENTRAL ASIA

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BANK CENTRAL ASIA

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, BANK CENTRAL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ALEFARM BREWING and BANK CENTRAL

The main advantage of trading using opposite ALEFARM BREWING and BANK CENTRAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALEFARM BREWING 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 ALEFARM BREWING DK 05 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..