Correlation Between Bank Central and ECN Capital

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

Diversification Opportunities for Bank Central and ECN Capital

BankECNDiversified AwayBankECNDiversified Away100%
-0.85
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Bank and ECN is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital 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 ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Bank Central i.e., Bank Central and ECN Capital go up and down completely randomly.

Pair Corralation between Bank Central and ECN Capital

Assuming the 90 days horizon Bank Central Asia is expected to under-perform the ECN Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 2.34 times less risky than ECN Capital. The pink sheet trades about -0.16 of its potential returns per unit of risk. The ECN Capital Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  158.00  in ECN Capital Corp on September 26, 2024 and sell it today you would earn a total of  58.00  from holding ECN Capital Corp or generate 36.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bank Central Asia  vs.  ECN Capital Corp

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -1001020304050
JavaScript chart by amCharts 3.21.15PBCRY ECNCF
       Timeline  
Bank Central Asia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec14.51515.51616.51717.518
ECN Capital Corp 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ECN Capital Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, ECN Capital reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1.51.61.71.81.922.12.2

Bank Central and ECN Capital Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.94-2.2-1.46-0.720.01050.631.261.892.52 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15PBCRY ECNCF
       Returns  

Pair Trading with Bank Central and ECN Capital

The main advantage of trading using opposite Bank Central and ECN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, ECN 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 ECN Capital will offset losses from the drop in ECN Capital's long position.
The idea behind Bank Central Asia and ECN Capital 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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