Correlation Between BANK CENTRAL and Martin Marietta

Can any of the company-specific risk be diversified away by investing in both BANK CENTRAL and Martin Marietta 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 Martin Marietta 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 Martin Marietta Materials, you can compare the effects of market volatilities on BANK CENTRAL and Martin Marietta 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 Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK CENTRAL and Martin Marietta.

Diversification Opportunities for BANK CENTRAL and Martin Marietta

-0.34

Correlation Coefficient

BANK CENTRAL  Martin Marietta

Very good diversification

The 3 months correlation between BANK and Martin is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and Martin Marietta go up and down completely randomly.

Pair Corralation between BANK CENTRAL and Martin Marietta

Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to generate 4.41 times more return on investment than Martin Marietta. However, BANK CENTRAL is 4.41 times more volatile than Martin Marietta Materials. It trades about -0.13 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -1.33 per unit of risk. If you would invest  59.00  in BANK CENTRAL ASIA on October 5, 2024 and sell it today you would lose (3.00) from holding BANK CENTRAL ASIA or give up 5.08% of portfolio value over 90 days.

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

BANK CENTRAL ASIA  vs.  Martin Marietta Materials

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 rather sound technical and fundamental indicators, BANK CENTRAL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Martin Marietta Materials

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Martin Marietta Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BANK CENTRAL and Martin Marietta

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

The idea behind BANK CENTRAL ASIA and Martin Marietta Materials 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.