Correlation Between Delhi Bank and Bank Central

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

By analyzing existing cross correlation between Delhi Bank Corp and Bank Central Asia, you can compare the effects of market volatilities on Delhi Bank and Bank Central 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 Delhi Bank with a short position of Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delhi Bank and Bank Central.

Diversification Opportunities for Delhi Bank and Bank Central

-0.81

Correlation Coefficient

Delhi Bank  Bank Central

Pay attention - limited upside

The 3 months correlation between Delhi and Bank is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Delhi Bank Corp and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia and Delhi 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 Delhi Bank Corp are associated (or correlated) with Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Delhi Bank i.e., Delhi Bank and Bank Central go up and down completely randomly.

Pair Corralation between Delhi Bank and Bank Central

Given the investment horizon of 90 days Delhi Bank Corp is expected to generate 0.07 times more return on investment than Bank Central. However, Delhi Bank Corp is 13.76 times less risky than Bank Central. It trades about 0.17 of its potential returns per unit of risk. Bank Central Asia is currently generating about -0.08 per unit of risk. If you would invest  2,075  in Delhi Bank Corp on December 28, 2024 and sell it today you would earn a total of  32.00  from holding Delhi Bank Corp or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.67%
Values	Daily Returns

Delhi Bank Corp  vs.  Bank Central Asia

Delhi Bank Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delhi Bank Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Delhi Bank and Bank Central

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

The idea behind Delhi Bank Corp and Bank Central Asia 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.