Correlation Between Bank of Ireland Group PLC and Central Asia

Can any of the company-specific risk be diversified away by investing in both Bank of Ireland Group PLC and Central Asia 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 Bank of Ireland Group PLC and Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Ireland and Central Asia Metals, you can compare the effects of market volatilities on Bank of Ireland Group PLC and Central Asia 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 Bank of Ireland Group PLC with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland Group PLC and Central Asia.

Diversification Opportunities for Bank of Ireland Group PLC and Central Asia

0.12

Correlation Coefficient

Bank of Ireland Group PLC  Central Asia

Average diversification

The 3 months correlation between Bank and Central is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and Bank of Ireland Group PLC 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 Bank of Ireland are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of Bank of Ireland Group PLC i.e., Bank of Ireland Group PLC and Central Asia go up and down completely randomly.

Pair Corralation between Bank of Ireland Group PLC and Central Asia

Assuming the 90 days trading horizon Bank of Ireland is expected to generate 0.97 times more return on investment than Central Asia. However, Bank of Ireland is 1.03 times less risky than Central Asia. It trades about 0.2 of its potential returns per unit of risk. Central Asia Metals is currently generating about 0.08 per unit of risk. If you would invest  864.00  in Bank of Ireland on December 30, 2024 and sell it today you would earn a total of  243.00  from holding Bank of Ireland or generate 28.13% return on investment over 90 days.

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

Bank of Ireland  vs.  Central Asia Metals

Bank of Ireland Group PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Ireland are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bank of Ireland Group PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Central Asia Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Central Asia Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Central Asia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bank of Ireland Group PLC and Central Asia

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

The idea behind Bank of Ireland and Central Asia Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.