Correlation Between Commercial International and Bank of East

Can any of the company-specific risk be diversified away by investing in both Commercial International and Bank of East 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 Commercial International and Bank of East into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Commercial International Bank and Bank of East, you can compare the effects of market volatilities on Commercial International and Bank of East 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 Commercial International with a short position of Bank of East. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial International and Bank of East.

Diversification Opportunities for Commercial International and Bank of East

-0.37

Correlation Coefficient

Commercial International  Bank of East

Very good diversification

The 3 months correlation between Commercial and Bank is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and Bank of East in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of East and Commercial International 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 Commercial International Bank are associated (or correlated) with Bank of East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of East has no effect on the direction of Commercial International i.e., Commercial International and Bank of East go up and down completely randomly.

Pair Corralation between Commercial International and Bank of East

Assuming the 90 days horizon Commercial International Bank is expected to under-perform the Bank of East. But the otc stock apears to be less risky and, when comparing its historical volatility, Commercial International Bank is 1.53 times less risky than Bank of East. The otc stock trades about -0.05 of its potential returns per unit of risk. The Bank of East is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Bank of East on September 12, 2024 and sell it today you would lose (2.00) from holding Bank of East or give up 1.61% of portfolio value over 90 days.

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

Commercial International Bank  vs.  Bank of East

Commercial International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial International Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Commercial International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bank of East

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of East has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bank of East is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Commercial International and Bank of East

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

The idea behind Commercial International Bank and Bank of East 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.