Correlation Between CIM FINANCIAL and CAUDAN DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both CIM FINANCIAL and CAUDAN DEVELOPMENT 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 CIM FINANCIAL and CAUDAN DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIM FINANCIAL SERVICES and CAUDAN DEVELOPMENT LTD, you can compare the effects of market volatilities on CIM FINANCIAL and CAUDAN DEVELOPMENT 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 CIM FINANCIAL with a short position of CAUDAN DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIM FINANCIAL and CAUDAN DEVELOPMENT.
Diversification Opportunities for CIM FINANCIAL and CAUDAN DEVELOPMENT
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CIM and CAUDAN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CIM FINANCIAL SERVICES and CAUDAN DEVELOPMENT LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAUDAN DEVELOPMENT LTD and CIM FINANCIAL 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 CIM FINANCIAL SERVICES are associated (or correlated) with CAUDAN DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAUDAN DEVELOPMENT LTD has no effect on the direction of CIM FINANCIAL i.e., CIM FINANCIAL and CAUDAN DEVELOPMENT go up and down completely randomly.
Pair Corralation between CIM FINANCIAL and CAUDAN DEVELOPMENT
Assuming the 90 days trading horizon CIM FINANCIAL is expected to generate 4.02 times less return on investment than CAUDAN DEVELOPMENT. But when comparing it to its historical volatility, CIM FINANCIAL SERVICES is 4.0 times less risky than CAUDAN DEVELOPMENT. It trades about 0.1 of its potential returns per unit of risk. CAUDAN DEVELOPMENT LTD is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 44.00 in CAUDAN DEVELOPMENT LTD on September 2, 2024 and sell it today you would earn a total of 13.00 from holding CAUDAN DEVELOPMENT LTD or generate 29.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIM FINANCIAL SERVICES vs. CAUDAN DEVELOPMENT LTD
Performance |
| Timeline |
| CIM FINANCIAL SERVICES |
| CAUDAN DEVELOPMENT LTD |
CIM FINANCIAL and CAUDAN DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIM FINANCIAL and CAUDAN DEVELOPMENT
The main advantage of trading using opposite CIM FINANCIAL and CAUDAN DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIM FINANCIAL position performs unexpectedly, CAUDAN DEVELOPMENT 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 CAUDAN DEVELOPMENT will offset losses from the drop in CAUDAN DEVELOPMENT's long position.| CIM FINANCIAL vs. FINCORP INVESTMENT LTD | CIM FINANCIAL vs. MCB GROUP LTD | CIM FINANCIAL vs. CAUDAN DEVELOPMENT LTD | CIM FINANCIAL vs. LUX ISLAND RESORTS |
| CAUDAN DEVELOPMENT vs. FINCORP INVESTMENT LTD | CAUDAN DEVELOPMENT vs. MCB GROUP LTD | CAUDAN DEVELOPMENT vs. LUX ISLAND RESORTS | CAUDAN DEVELOPMENT vs. NEW MAURITIUS HOTELS |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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