Correlation Between Campina Ice and Cisarua Mountain
Can any of the company-specific risk be diversified away by investing in both Campina Ice and Cisarua Mountain 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 Campina Ice and Cisarua Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Campina Ice Cream and Cisarua Mountain Dairy, you can compare the effects of market volatilities on Campina Ice and Cisarua Mountain 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 Campina Ice with a short position of Cisarua Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campina Ice and Cisarua Mountain.
Diversification Opportunities for Campina Ice and Cisarua Mountain
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Campina and Cisarua is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Campina Ice Cream and Cisarua Mountain Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisarua Mountain Dairy and Campina Ice 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 Campina Ice Cream are associated (or correlated) with Cisarua Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisarua Mountain Dairy has no effect on the direction of Campina Ice i.e., Campina Ice and Cisarua Mountain go up and down completely randomly.
Pair Corralation between Campina Ice and Cisarua Mountain
Assuming the 90 days trading horizon Campina Ice is expected to generate 2.49 times less return on investment than Cisarua Mountain. In addition to that, Campina Ice is 2.62 times more volatile than Cisarua Mountain Dairy. It trades about 0.01 of its total potential returns per unit of risk. Cisarua Mountain Dairy is currently generating about 0.08 per unit of volatility. If you would invest 414,265 in Cisarua Mountain Dairy on August 27, 2024 and sell it today you would earn a total of 115,735 from holding Cisarua Mountain Dairy or generate 27.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Campina Ice Cream vs. Cisarua Mountain Dairy
Performance |
| Timeline |
| Campina Ice Cream |
| Cisarua Mountain Dairy |
Campina Ice and Cisarua Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Campina Ice and Cisarua Mountain
The main advantage of trading using opposite Campina Ice and Cisarua Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Campina Ice position performs unexpectedly, Cisarua Mountain 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 Cisarua Mountain will offset losses from the drop in Cisarua Mountain's long position.The idea behind Campina Ice Cream and Cisarua Mountain Dairy 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.| Cisarua Mountain vs. Avia Avian PT | Cisarua Mountain vs. Medikaloka Hermina PT | Cisarua Mountain vs. Dayamitra Telekomunikasi PT | Cisarua Mountain vs. Sumber Alfaria Trijaya |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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