Correlation Between Bank Central and Logistics Innovation

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

Diversification Opportunities for Bank Central and Logistics Innovation

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bank and Logistics is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Logistics Innovation Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logistics Innovation 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 Logistics Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logistics Innovation has no effect on the direction of Bank Central i.e., Bank Central and Logistics Innovation go up and down completely randomly.

Pair Corralation between Bank Central and Logistics Innovation

If you would invest  0.12  in Logistics Innovation Technologies on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Logistics Innovation Technologies or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy1.59%
ValuesDaily Returns

Bank Central Asia  vs.  Logistics Innovation Technolog

 Performance 
       Timeline  
Bank Central Asia 

Risk-Adjusted Performance

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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 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.
Logistics Innovation 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Logistics Innovation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Logistics Innovation is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bank Central and Logistics Innovation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank Central and Logistics Innovation

The main advantage of trading using opposite Bank Central and Logistics Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Logistics Innovation 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 Logistics Innovation will offset losses from the drop in Logistics Innovation's long position.
The idea behind Bank Central Asia and Logistics Innovation Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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