Correlation Between Bank Central and FCCC

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

Diversification Opportunities for Bank Central and FCCC

0.0

Correlation Coefficient

Bank Central  FCCC

Pay attention - limited upside

The 3 months correlation between Bank and FCCC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and FCCC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FCCC Inc 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 FCCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FCCC Inc has no effect on the direction of Bank Central i.e., Bank Central and FCCC go up and down completely randomly.

Pair Corralation between Bank Central and FCCC

Assuming the 90 days horizon Bank Central Asia is expected to under-perform the FCCC. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 21.85 times less risky than FCCC. The pink sheet trades about -0.08 of its potential returns per unit of risk. The FCCC Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  47.00  in FCCC Inc on March 13, 2024 and sell it today you would lose (8.00) from holding FCCC Inc or give up 17.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Bank Central Asia  vs.  FCCC Inc

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.

FCCC Inc

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days FCCC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, FCCC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bank Central and FCCC

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

The idea behind Bank Central Asia and FCCC Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.