Correlation Between Birks and Cheetah Net
Can any of the company-specific risk be diversified away by investing in both Birks and Cheetah Net 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 Birks and Cheetah Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and Cheetah Net Supply, you can compare the effects of market volatilities on Birks and Cheetah Net 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 Birks with a short position of Cheetah Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and Cheetah Net.
Diversification Opportunities for Birks and Cheetah Net
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Birks and Cheetah is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and Cheetah Net Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Net Supply and Birks 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 Birks Group are associated (or correlated) with Cheetah Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheetah Net Supply has no effect on the direction of Birks i.e., Birks and Cheetah Net go up and down completely randomly.
Pair Corralation between Birks and Cheetah Net
Considering the 90-day investment horizon Birks Group is expected to generate 0.56 times more return on investment than Cheetah Net. However, Birks Group is 1.8 times less risky than Cheetah Net. It trades about -0.42 of its potential returns per unit of risk. Cheetah Net Supply is currently generating about -0.48 per unit of risk. If you would invest 221.00 in Birks Group on August 28, 2024 and sell it today you would lose (61.00) from holding Birks Group or give up 27.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Birks Group vs. Cheetah Net Supply
Performance |
| Timeline |
| Birks Group |
| Cheetah Net Supply |
Birks and Cheetah Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and Cheetah Net
The main advantage of trading using opposite Birks and Cheetah Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks position performs unexpectedly, Cheetah Net 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 Cheetah Net will offset losses from the drop in Cheetah Net's long position.The idea behind Birks Group and Cheetah Net Supply 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.| Cheetah Net vs. Inflection Point Acquisition | Cheetah Net vs. Analog Devices | Cheetah Net vs. Citizens Bancorp Investment | Cheetah Net vs. Allient |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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