Correlation Between Century Wind and La Kaffa
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
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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Wind Power vs. La Kaffa International
Performance |
| Timeline |
| Century Wind Power |
| La Kaffa International |
Century Wind and La Kaffa Volatility Contrast
Predicted Return Density |
| 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.| Century Wind vs. Healthconn Corp | ||
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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