Correlation Between BANK CENTRAL and AURUBIS

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

Diversification Opportunities for BANK CENTRAL and AURUBIS

-0.57

Correlation Coefficient

BANK CENTRAL  AURUBIS

Excellent diversification

The 3 months correlation between BANK and AURUBIS is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and AURUBIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS 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 AURUBIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and AURUBIS go up and down completely randomly.

Pair Corralation between BANK CENTRAL and AURUBIS

Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to under-perform the AURUBIS. But the stock apears to be less risky and, when comparing its historical volatility, BANK CENTRAL ASIA is 1.39 times less risky than AURUBIS. The stock trades about -0.07 of its potential returns per unit of risk. The AURUBIS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,415  in AURUBIS on October 8, 2024 and sell it today you would earn a total of  1,105  from holding AURUBIS or generate 17.23% return on investment over 90 days.

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

BANK CENTRAL ASIA  vs.  AURUBIS

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AURUBIS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AURUBIS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AURUBIS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK CENTRAL and AURUBIS

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

The idea behind BANK CENTRAL ASIA and AURUBIS 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.