Correlation Between Bank Central and Virtual Medical

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

Diversification Opportunities for Bank Central and Virtual Medical

-0.82

Correlation Coefficient

Bank Central  Virtual Medical

Pay attention - limited upside

The 3 months correlation between Bank and Virtual is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Virtual Medical International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtual Medical Inte 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 Virtual Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtual Medical Inte has no effect on the direction of Bank Central i.e., Bank Central and Virtual Medical go up and down completely randomly.

Pair Corralation between Bank Central and Virtual Medical

If you would invest  1,610  in Bank Central Asia on September 13, 2024 and sell it today you would earn a total of  17.00  from holding Bank Central Asia or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Bank Central Asia  vs.  Virtual Medical International

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 fairly strong basic indicators, Bank Central is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtual Medical Inte

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtual Medical International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Virtual Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Central and Virtual Medical

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

The idea behind Bank Central Asia and Virtual Medical International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.