Correlation Between Bank Central and International Stem

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

Diversification Opportunities for Bank Central and International Stem

-0.48

Correlation Coefficient

Bank Central  International Stem

Very good diversification

The 3 months correlation between Bank and International is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and International Stem Cell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stem Cell 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 International Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stem Cell has no effect on the direction of Bank Central i.e., Bank Central and International Stem go up and down completely randomly.

Pair Corralation between Bank Central and International Stem

Assuming the 90 days horizon Bank Central Asia is expected to under-perform the International Stem. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 15.1 times less risky than International Stem. The pink sheet trades about -0.09 of its potential returns per unit of risk. The International Stem Cell is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6.00  in International Stem Cell on September 28, 2024 and sell it today you would earn a total of  4.00  from holding International Stem Cell or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Bank Central Asia  vs.  International Stem Cell

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 unsteady 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.

International Stem Cell

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Stem Cell are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, International Stem displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Central and International Stem

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

The idea behind Bank Central Asia and International Stem Cell 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.