Correlation Between Chiba Bank and Encore Capital

Can any of the company-specific risk be diversified away by investing in both Chiba Bank and Encore Capital 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 Chiba Bank and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Chiba Bank and Encore Capital

0.0

Correlation Coefficient

Chiba Bank  Encore Capital

Pay attention - limited upside

The 3 months correlation between Chiba and Encore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank Ltd and Encore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Capital Group and Chiba Bank 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 Chiba Bank Ltd are associated (or correlated) with Encore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Capital Group has no effect on the direction of Chiba Bank i.e., Chiba Bank and Encore Capital go up and down completely randomly.

Pair Corralation between Chiba Bank and Encore Capital

If you would invest  3,768  in Chiba Bank Ltd on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Chiba Bank Ltd or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Chiba Bank Ltd  vs.  Encore Capital Group

Chiba Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chiba Bank Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chiba Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Encore Capital Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Encore Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Chiba Bank and Encore Capital

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

The idea behind Chiba Bank Ltd and Encore Capital Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.