Correlation Between Bank Central and Beard Energy

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

Diversification Opportunities for Bank Central and Beard Energy

-0.55

Correlation Coefficient

Bank Central  Beard Energy

Excellent diversification

The 3 months correlation between Bank and Beard is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Beard Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beard Energy Transition 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 Beard Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beard Energy Transition has no effect on the direction of Bank Central i.e., Bank Central and Beard Energy go up and down completely randomly.

Pair Corralation between Bank Central and Beard Energy

If you would invest  1,054  in Beard Energy Transition on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Beard Energy Transition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Bank Central Asia  vs.  Beard Energy Transition

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.

Beard Energy Transition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beard Energy Transition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Beard Energy 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 Beard Energy

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

The idea behind Bank Central Asia and Beard Energy Transition 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.