Correlation Between Bank Central and First Eagle

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

Diversification Opportunities for Bank Central and First Eagle

-0.27

Correlation Coefficient

Bank Central  First Eagle

Very good diversification

The 3 months correlation between Bank and First is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and First Eagle Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Alternative 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 First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Alternative has no effect on the direction of Bank Central i.e., Bank Central and First Eagle go up and down completely randomly.

Pair Corralation between Bank Central and First Eagle

If you would invest  1,358  in Bank Central Asia on October 27, 2024 and sell it today you would earn a total of  89.00  from holding Bank Central Asia or generate 6.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.33%
Values	Daily Returns

Bank Central Asia  vs.  First Eagle Alternative

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

First Eagle Alternative

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Eagle Alternative has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, First Eagle is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bank Central and First Eagle

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

The idea behind Bank Central Asia and First Eagle Alternative 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.