Correlation Between Bankers Investment and Central Asia

Can any of the company-specific risk be diversified away by investing in both Bankers Investment and Central Asia 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 Bankers Investment and Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bankers Investment Trust and Central Asia Metals, you can compare the effects of market volatilities on Bankers Investment and Central Asia 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 Bankers Investment with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and Central Asia.

Diversification Opportunities for Bankers Investment and Central Asia

-0.66

Correlation Coefficient

Bankers Investment  Central Asia

Excellent diversification

The 3 months correlation between Bankers and Central is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and Bankers Investment 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 Bankers Investment Trust are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of Bankers Investment i.e., Bankers Investment and Central Asia go up and down completely randomly.

Pair Corralation between Bankers Investment and Central Asia

Assuming the 90 days trading horizon Bankers Investment Trust is expected to generate 0.4 times more return on investment than Central Asia. However, Bankers Investment Trust is 2.47 times less risky than Central Asia. It trades about 0.14 of its potential returns per unit of risk. Central Asia Metals is currently generating about -0.21 per unit of risk. If you would invest  11,140  in Bankers Investment Trust on September 30, 2024 and sell it today you would earn a total of  380.00  from holding Bankers Investment Trust or generate 3.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bankers Investment Trust  vs.  Central Asia Metals

Bankers Investment Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bankers Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Central Asia Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Asia Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bankers Investment and Central Asia

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

The idea behind Bankers Investment Trust and Central Asia Metals 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.