Correlation Between BANK CENTRAL and Envela Corp

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

Diversification Opportunities for BANK CENTRAL and Envela Corp

-0.64

Correlation Coefficient

BANK CENTRAL  Envela Corp

Excellent diversification

The 3 months correlation between BANK and Envela is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp 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 Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and Envela Corp go up and down completely randomly.

Pair Corralation between BANK CENTRAL and Envela Corp

Assuming the 90 days trading horizon BANK CENTRAL is expected to generate 3.28 times less return on investment than Envela Corp. But when comparing it to its historical volatility, BANK CENTRAL ASIA is 3.34 times less risky than Envela Corp. It trades about 0.03 of its potential returns per unit of risk. Envela Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Envela Corp on October 5, 2024 and sell it today you would earn a total of  155.00  from holding Envela Corp or generate 30.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.4%
Values	Daily Returns

BANK CENTRAL ASIA  vs.  Envela Corp

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.

Envela Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Envela Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Envela Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BANK CENTRAL and Envela Corp

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

The idea behind BANK CENTRAL ASIA and Envela Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.