Correlation Between Bank Central and Mountain Crest

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

Diversification Opportunities for Bank Central and Mountain Crest

-0.25

Correlation Coefficient

Bank Central  Mountain Crest

Very good diversification

The 3 months correlation between Bank and Mountain is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Mountain Crest Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Crest Acqui 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 Mountain Crest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Crest Acqui has no effect on the direction of Bank Central i.e., Bank Central and Mountain Crest go up and down completely randomly.

Pair Corralation between Bank Central and Mountain Crest

Assuming the 90 days horizon Bank Central Asia is expected to generate 0.9 times more return on investment than Mountain Crest. However, Bank Central Asia is 1.12 times less risky than Mountain Crest. It trades about 0.04 of its potential returns per unit of risk. Mountain Crest Acquisition is currently generating about -0.04 per unit of risk. If you would invest  1,309  in Bank Central Asia on September 14, 2024 and sell it today you would earn a total of  352.00  from holding Bank Central Asia or generate 26.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.54%
Values	Daily Returns

Bank Central Asia  vs.  Mountain Crest Acquisition

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.

Mountain Crest Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain Crest Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Mountain Crest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank Central and Mountain Crest

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

The idea behind Bank Central Asia and Mountain Crest Acquisition 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.