Correlation Between Century Wind and La Kaffa

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Can any of the company-specific risk be diversified away by investing in both Century Wind and La Kaffa 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 Century Wind and La Kaffa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and La Kaffa International, you can compare the effects of market volatilities on Century Wind and La Kaffa 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 Century Wind with a short position of La Kaffa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and La Kaffa.

Diversification Opportunities for Century Wind and La Kaffa

Century2732Diversified AwayCentury2732Diversified Away100%
0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Century and 2732 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and La Kaffa International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Kaffa International and Century Wind 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 Century Wind Power are associated (or correlated) with La Kaffa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Kaffa International has no effect on the direction of Century Wind i.e., Century Wind and La Kaffa go up and down completely randomly.

Pair Corralation between Century Wind and La Kaffa

Assuming the 90 days trading horizon Century Wind is expected to generate 1.48 times less return on investment than La Kaffa. In addition to that, Century Wind is 3.28 times more volatile than La Kaffa International. It trades about 0.09 of its total potential returns per unit of risk. La Kaffa International is currently generating about 0.44 per unit of volatility. If you would invest  9,360  in La Kaffa International on December 2, 2024 and sell it today you would earn a total of  530.00  from holding La Kaffa International or generate 5.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Century Wind Power  vs.  La Kaffa International

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-505
JavaScript chart by amCharts 3.21.152072 2732
       Timeline  
Century Wind Power 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Century Wind Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFebMar230240250260270280290300
La Kaffa International 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days La Kaffa International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, La Kaffa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFebMar949698100102104106

Century Wind and La Kaffa Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.9-2.92-1.94-0.960.00.911.842.773.69 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.152072 2732
       Returns  

Pair Trading with Century Wind and La Kaffa

The main advantage of trading using opposite Century Wind and La Kaffa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, La Kaffa 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 La Kaffa will offset losses from the drop in La Kaffa's long position.
The idea behind Century Wind Power and La Kaffa 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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