Correlation Between CEO Group and CMC Investment
Can any of the company-specific risk be diversified away by investing in both CEO Group and CMC Investment 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 CEO Group and CMC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEO Group JSC and CMC Investment JSC, you can compare the effects of market volatilities on CEO Group and CMC Investment 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 CEO Group with a short position of CMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEO Group and CMC Investment.
Diversification Opportunities for CEO Group and CMC Investment
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CEO and CMC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CEO Group JSC and CMC Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Investment JSC and CEO Group 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 CEO Group JSC are associated (or correlated) with CMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Investment JSC has no effect on the direction of CEO Group i.e., CEO Group and CMC Investment go up and down completely randomly.
Pair Corralation between CEO Group and CMC Investment
Assuming the 90 days trading horizon CEO Group JSC is expected to generate 0.33 times more return on investment than CMC Investment. However, CEO Group JSC is 2.99 times less risky than CMC Investment. It trades about -0.18 of its potential returns per unit of risk. CMC Investment JSC is currently generating about -0.23 per unit of risk. If you would invest 1,520,000 in CEO Group JSC on August 31, 2024 and sell it today you would lose (100,000) from holding CEO Group JSC or give up 6.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 59.09% |
| Values | Daily Returns |
CEO Group JSC vs. CMC Investment JSC
Performance |
| Timeline |
| CEO Group JSC |
| CMC Investment JSC |
CEO Group and CMC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEO Group and CMC Investment
The main advantage of trading using opposite CEO Group and CMC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEO Group position performs unexpectedly, CMC Investment 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 CMC Investment will offset losses from the drop in CMC Investment's long position.| CEO Group vs. FIT INVEST JSC | CEO Group vs. Damsan JSC | CEO Group vs. An Phat Plastic | CEO Group vs. Alphanam ME |
| CMC Investment vs. FIT INVEST JSC | CMC Investment vs. Damsan JSC | CMC Investment vs. An Phat Plastic | CMC Investment vs. Alphanam ME |
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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