Correlation Between Bank Central and Santa Cruz

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

Diversification Opportunities for Bank Central and Santa Cruz

-0.75

Correlation Coefficient

Bank Central  Santa Cruz

Pay attention - limited upside

The 3 months correlation between Bank and Santa is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Santa Cruz County in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santa Cruz County 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 Santa Cruz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santa Cruz County has no effect on the direction of Bank Central i.e., Bank Central and Santa Cruz go up and down completely randomly.

Pair Corralation between Bank Central and Santa Cruz

Assuming the 90 days horizon Bank Central is expected to generate 3.11 times less return on investment than Santa Cruz. In addition to that, Bank Central is 1.32 times more volatile than Santa Cruz County. It trades about 0.04 of its total potential returns per unit of risk. Santa Cruz County is currently generating about 0.17 per unit of volatility. If you would invest  2,679  in Santa Cruz County on September 2, 2024 and sell it today you would earn a total of  1,471  from holding Santa Cruz County or generate 54.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.74%
Values	Daily Returns

Bank Central Asia  vs.  Santa Cruz County

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.

Santa Cruz County

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Santa Cruz County are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Santa Cruz is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bank Central and Santa Cruz

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

The idea behind Bank Central Asia and Santa Cruz County 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.