Correlation Between Cameo Communications and Gigastorage Corp
Can any of the company-specific risk be diversified away by investing in both Cameo Communications and Gigastorage Corp 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 Cameo Communications and Gigastorage Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cameo Communications and Gigastorage Corp, you can compare the effects of market volatilities on Cameo Communications and Gigastorage Corp 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 Cameo Communications with a short position of Gigastorage Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameo Communications and Gigastorage Corp.
Diversification Opportunities for Cameo Communications and Gigastorage Corp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cameo and Gigastorage is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Gigastorage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigastorage Corp and Cameo Communications 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 Cameo Communications are associated (or correlated) with Gigastorage Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigastorage Corp has no effect on the direction of Cameo Communications i.e., Cameo Communications and Gigastorage Corp go up and down completely randomly.
Pair Corralation between Cameo Communications and Gigastorage Corp
Assuming the 90 days trading horizon Cameo Communications is expected to generate 0.55 times more return on investment than Gigastorage Corp. However, Cameo Communications is 1.82 times less risky than Gigastorage Corp. It trades about -0.25 of its potential returns per unit of risk. Gigastorage Corp is currently generating about -0.16 per unit of risk. If you would invest 1,130 in Cameo Communications on November 3, 2024 and sell it today you would lose (60.00) from holding Cameo Communications or give up 5.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cameo Communications vs. Gigastorage Corp
Performance |
| Timeline |
| Cameo Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gigastorage Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cameo Communications and Gigastorage Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cameo Communications and Gigastorage Corp
The main advantage of trading using opposite Cameo Communications and Gigastorage Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cameo Communications position performs unexpectedly, Gigastorage Corp 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 Gigastorage Corp will offset losses from the drop in Gigastorage Corp's long position.The idea behind Cameo Communications and Gigastorage Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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