Correlation Between Bank Central and Murphy Canyon

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

Diversification Opportunities for Bank Central and Murphy Canyon

-0.71

Correlation Coefficient

Bank Central  Murphy Canyon

Pay attention - limited upside

The 3 months correlation between Bank and Murphy is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Murphy Canyon Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy Canyon Acquisition 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 Murphy Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murphy Canyon Acquisition has no effect on the direction of Bank Central i.e., Bank Central and Murphy Canyon go up and down completely randomly.

Pair Corralation between Bank Central and Murphy Canyon

Assuming the 90 days horizon Bank Central Asia is expected to generate 3.62 times more return on investment than Murphy Canyon. However, Bank Central is 3.62 times more volatile than Murphy Canyon Acquisition. It trades about 0.03 of its potential returns per unit of risk. Murphy Canyon Acquisition is currently generating about 0.1 per unit of risk. If you would invest  1,313  in Bank Central Asia on September 18, 2024 and sell it today you would earn a total of  259.00  from holding Bank Central Asia or generate 19.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.28%
Values	Daily Returns

Bank Central Asia  vs.  Murphy Canyon 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 latest weak 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.

Murphy Canyon Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bank Central and Murphy Canyon

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

The idea behind Bank Central Asia and Murphy Canyon 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.