Correlation Between CA Sales and EnX
Can any of the company-specific risk be diversified away by investing in both CA Sales and EnX 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 CA Sales and EnX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Sales Holdings and enX Group, you can compare the effects of market volatilities on CA Sales and EnX 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 CA Sales with a short position of EnX. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and EnX.
Diversification Opportunities for CA Sales and EnX
Very good diversification
The 3 months correlation between CAA and EnX is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and enX Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enX Group and CA Sales 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 CA Sales Holdings are associated (or correlated) with EnX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enX Group has no effect on the direction of CA Sales i.e., CA Sales and EnX go up and down completely randomly.
Pair Corralation between CA Sales and EnX
Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 1.15 times more return on investment than EnX. However, CA Sales is 1.15 times more volatile than enX Group. It trades about 0.13 of its potential returns per unit of risk. enX Group is currently generating about 0.06 per unit of risk. If you would invest 156,000 in CA Sales Holdings on September 4, 2024 and sell it today you would earn a total of 11,200 from holding CA Sales Holdings or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Sales Holdings vs. enX Group
Performance |
| Timeline |
| CA Sales Holdings |
| enX Group |
CA Sales and EnX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Sales and EnX
The main advantage of trading using opposite CA Sales and EnX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Sales position performs unexpectedly, EnX 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 EnX will offset losses from the drop in EnX's long position.| CA Sales vs. eMedia Holdings Limited | CA Sales vs. British American Tobacco | CA Sales vs. Kumba Iron Ore | CA Sales vs. Blue Label Telecoms |
| EnX vs. British American Tobacco | EnX vs. City Lodge Hotels | EnX vs. Astral Foods | EnX vs. Frontier Transport Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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