Correlation Between Bank Central and Sientra

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

Diversification Opportunities for Bank Central and Sientra

-0.78

Correlation Coefficient

Bank Central  Sientra

Pay attention - limited upside

The 3 months correlation between Bank and Sientra is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Sientra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sientra 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 Sientra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sientra has no effect on the direction of Bank Central i.e., Bank Central and Sientra go up and down completely randomly.

Pair Corralation between Bank Central and Sientra

Assuming the 90 days horizon Bank Central is expected to generate 43.71 times less return on investment than Sientra. But when comparing it to its historical volatility, Bank Central Asia is 6.69 times less risky than Sientra. It trades about 0.02 of its potential returns per unit of risk. Sientra is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  177.00  in Sientra on October 21, 2024 and sell it today you would earn a total of  252.00  from holding Sientra or generate 142.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.6%
Values	Daily Returns

Bank Central Asia  vs.  Sientra

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 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.

Sientra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sientra has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Sientra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bank Central and Sientra

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

The idea behind Bank Central Asia and Sientra 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.