Correlation Between Bank Central and Verena Multi

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

Diversification Opportunities for Bank Central and Verena Multi

0.45

Correlation Coefficient

Bank Central  Verena Multi

Very weak diversification

The 3 months correlation between Bank and Verena is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Verena Multi Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verena Multi Finance 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 Verena Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verena Multi Finance has no effect on the direction of Bank Central i.e., Bank Central and Verena Multi go up and down completely randomly.

Pair Corralation between Bank Central and Verena Multi

Assuming the 90 days trading horizon Bank Central Asia is expected to generate 0.66 times more return on investment than Verena Multi. However, Bank Central Asia is 1.51 times less risky than Verena Multi. It trades about 0.04 of its potential returns per unit of risk. Verena Multi Finance is currently generating about -0.03 per unit of risk. If you would invest  834,548  in Bank Central Asia on February 23, 2024 and sell it today you would earn a total of  100,452  from holding Bank Central Asia or generate 12.04% return on investment over 90 days.

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

Bank Central Asia  vs.  Verena Multi Finance

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. 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.

Verena Multi Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verena Multi Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Verena Multi is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bank Central and Verena Multi

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

The idea behind Bank Central Asia and Verena Multi Finance 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.