Correlation Between Bank Central and Chavant Capital

Can any of the company-specific risk be diversified away by investing in both Bank Central and Chavant 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 Bank Central and Chavant Capital 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 Chavant Capital Acquisition, you can compare the effects of market volatilities on Bank Central and Chavant 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 Bank Central with a short position of Chavant Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Chavant Capital.

Diversification Opportunities for Bank Central and Chavant Capital

-0.64

Correlation Coefficient

Bank Central  Chavant Capital

Excellent diversification

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

Pair Corralation between Bank Central and Chavant Capital

Assuming the 90 days horizon Bank Central is expected to generate 2.39 times less return on investment than Chavant Capital. In addition to that, Bank Central is 1.4 times more volatile than Chavant Capital Acquisition. It trades about 0.03 of its total potential returns per unit of risk. Chavant Capital Acquisition is currently generating about 0.11 per unit of volatility. If you would invest  1,025  in Chavant Capital Acquisition on September 16, 2024 and sell it today you would earn a total of  169.00  from holding Chavant Capital Acquisition or generate 16.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	29.03%
Values	Daily Returns

Bank Central Asia  vs.  Chavant Capital Acquisition

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 fairly strong basic indicators, Bank Central is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chavant Capital Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chavant Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Chavant Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank Central and Chavant Capital

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

The idea behind Bank Central Asia and Chavant Capital Acquisition 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.