Correlation Between EBRO FOODS and BANK CENTRAL

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

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

Diversification Opportunities for EBRO FOODS and BANK CENTRAL

-0.51

Correlation Coefficient

EBRO FOODS  BANK CENTRAL

Excellent diversification

The 3 months correlation between EBRO and BANK is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS i.e., EBRO FOODS and BANK CENTRAL go up and down completely randomly.

Pair Corralation between EBRO FOODS and BANK CENTRAL

Assuming the 90 days trading horizon EBRO FOODS is expected to generate 0.53 times more return on investment than BANK CENTRAL. However, EBRO FOODS is 1.88 times less risky than BANK CENTRAL. It trades about 0.06 of its potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about -0.23 per unit of risk. If you would invest  1,570  in EBRO FOODS on December 20, 2024 and sell it today you would earn a total of  48.00  from holding EBRO FOODS or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

EBRO FOODS  vs.  BANK CENTRAL ASIA

EBRO FOODS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EBRO FOODS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EBRO FOODS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 weak 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 EBRO FOODS and BANK CENTRAL

The main advantage of trading using opposite EBRO FOODS and BANK CENTRAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS 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 EBRO FOODS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.