Correlation Between BANK CENTRAL and FAIR ISAAC

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

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

Diversification Opportunities for BANK CENTRAL and FAIR ISAAC

0.84

Correlation Coefficient

BANK CENTRAL  FAIR ISAAC

Very poor diversification

The 3 months correlation between BANK and FAIR is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and FAIR ISAAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAIR ISAAC and BANK CENTRAL 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 CENTRAL ASIA are associated (or correlated) with FAIR ISAAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAIR ISAAC has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and FAIR ISAAC go up and down completely randomly.

Pair Corralation between BANK CENTRAL and FAIR ISAAC

Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to under-perform the FAIR ISAAC. But the stock apears to be less risky and, when comparing its historical volatility, BANK CENTRAL ASIA is 1.43 times less risky than FAIR ISAAC. The stock trades about -0.19 of its potential returns per unit of risk. The FAIR ISAAC is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  199,350  in FAIR ISAAC on December 21, 2024 and sell it today you would lose (27,950) from holding FAIR ISAAC or give up 14.02% of portfolio value over 90 days.

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

BANK CENTRAL ASIA  vs.  FAIR ISAAC

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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

FAIR ISAAC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BANK CENTRAL and FAIR ISAAC

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

The idea behind BANK CENTRAL ASIA and FAIR ISAAC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.