Correlation Between Bank Central and Dyandra Media

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

Diversification Opportunities for Bank Central and Dyandra Media

0.23

Correlation Coefficient

Bank Central  Dyandra Media

Modest diversification

The 3 months correlation between Bank and Dyandra is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Dyandra Media International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dyandra Media Intern 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 Dyandra Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dyandra Media Intern has no effect on the direction of Bank Central i.e., Bank Central and Dyandra Media go up and down completely randomly.

Pair Corralation between Bank Central and Dyandra Media

Assuming the 90 days trading horizon Bank Central is expected to generate 4.81 times less return on investment than Dyandra Media. But when comparing it to its historical volatility, Bank Central Asia is 1.35 times less risky than Dyandra Media. It trades about 0.03 of its potential returns per unit of risk. Dyandra Media International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,000  in Dyandra Media International on February 18, 2024 and sell it today you would earn a total of  800.00  from holding Dyandra Media International or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bank Central Asia  vs.  Dyandra Media International

Bank Central Asia

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Central Asia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Bank Central is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Dyandra Media Intern

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dyandra Media International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Dyandra Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Central and Dyandra Media

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

The idea behind Bank Central Asia and Dyandra Media International 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.