Correlation Between BANK CENTRAL and Gap

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

Diversification Opportunities for BANK CENTRAL and Gap

0.61

Correlation Coefficient

BANK CENTRAL  Gap

Poor diversification

The 3 months correlation between BANK and Gap is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of BANK CENTRAL i.e., BANK CENTRAL and Gap go up and down completely randomly.

Pair Corralation between BANK CENTRAL and Gap

Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to generate 0.41 times more return on investment than Gap. However, BANK CENTRAL ASIA is 2.42 times less risky than Gap. It trades about 0.07 of its potential returns per unit of risk. The Gap is currently generating about 0.03 per unit of risk. If you would invest  44.00  in BANK CENTRAL ASIA on April 24, 2025 and sell it today you would earn a total of  3.00  from holding BANK CENTRAL ASIA or generate 6.82% return on investment over 90 days.

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

BANK CENTRAL ASIA  vs.  The Gap

BANK CENTRAL ASIA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BANK CENTRAL ASIA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, BANK CENTRAL may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Gap

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Gap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with BANK CENTRAL and Gap

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

The idea behind BANK CENTRAL ASIA and The Gap 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..