Correlation Between Bank Central and Knorr Bremse
Can any of the company-specific risk be diversified away by investing in both Bank Central and Knorr Bremse 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 Knorr Bremse 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 Knorr Bremse Aktiengesellschaft, you can compare the effects of market volatilities on Bank Central and Knorr Bremse 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 Knorr Bremse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Knorr Bremse.
Diversification Opportunities for Bank Central and Knorr Bremse
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Knorr is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Knorr Bremse Aktiengesellschaf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knorr Bremse Aktieng 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 Knorr Bremse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knorr Bremse Aktieng has no effect on the direction of Bank Central i.e., Bank Central and Knorr Bremse go up and down completely randomly.
Pair Corralation between Bank Central and Knorr Bremse
Assuming the 90 days horizon Bank Central Asia is expected to under-perform the Knorr Bremse. In addition to that, Bank Central is 1.55 times more volatile than Knorr Bremse Aktiengesellschaft. It trades about -0.19 of its total potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about -0.16 per unit of volatility. If you would invest 1,932 in Knorr Bremse Aktiengesellschaft on October 9, 2024 and sell it today you would lose (92.00) from holding Knorr Bremse Aktiengesellschaft or give up 4.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bank Central Asia vs. Knorr Bremse Aktiengesellschaf
Performance |
Timeline |
Bank Central Asia |
Knorr Bremse Aktieng |
Bank Central and Knorr Bremse Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Central and Knorr Bremse
The main advantage of trading using opposite Bank Central and Knorr Bremse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Knorr Bremse 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 Knorr Bremse will offset losses from the drop in Knorr Bremse's long position.Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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