Correlation Between Bank Central and Polarityte

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

Diversification Opportunities for Bank Central and Polarityte

0.0

Correlation Coefficient

Bank Central  Polarityte

Pay attention - limited upside

The 3 months correlation between Bank and Polarityte is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Polarityte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polarityte 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 Polarityte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polarityte has no effect on the direction of Bank Central i.e., Bank Central and Polarityte go up and down completely randomly.

Pair Corralation between Bank Central and Polarityte

Assuming the 90 days horizon Bank Central Asia is expected to generate 0.13 times more return on investment than Polarityte. However, Bank Central Asia is 7.8 times less risky than Polarityte. It trades about 0.02 of its potential returns per unit of risk. Polarityte is currently generating about -0.11 per unit of risk. If you would invest  1,314  in Bank Central Asia on October 10, 2024 and sell it today you would earn a total of  156.00  from holding Bank Central Asia or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.06%
Values	Daily Returns

Bank Central Asia  vs.  Polarityte

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 fragile 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.

Polarityte

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bank Central and Polarityte

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

The idea behind Bank Central Asia and Polarityte 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.