Correlation Between CMC Investment and CEO Group
Can any of the company-specific risk be diversified away by investing in both CMC Investment and CEO Group 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 CMC Investment and CEO Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Investment JSC and CEO Group JSC, you can compare the effects of market volatilities on CMC Investment and CEO Group 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 CMC Investment with a short position of CEO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Investment and CEO Group.
Diversification Opportunities for CMC Investment and CEO Group
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CMC and CEO is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CMC Investment JSC and CEO Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEO Group JSC and CMC Investment 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 CMC Investment JSC are associated (or correlated) with CEO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEO Group JSC has no effect on the direction of CMC Investment i.e., CMC Investment and CEO Group go up and down completely randomly.
Pair Corralation between CMC Investment and CEO Group
Assuming the 90 days trading horizon CMC Investment JSC is expected to generate 3.02 times more return on investment than CEO Group. However, CMC Investment is 3.02 times more volatile than CEO Group JSC. It trades about 0.02 of its potential returns per unit of risk. CEO Group JSC is currently generating about -0.16 per unit of risk. If you would invest 600,000 in CMC Investment JSC on August 28, 2024 and sell it today you would earn a total of 0.00 from holding CMC Investment JSC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 61.9% |
| Values | Daily Returns |
CMC Investment JSC vs. CEO Group JSC
Performance |
| Timeline |
| CMC Investment JSC |
| CEO Group JSC |
CMC Investment and CEO Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Investment and CEO Group
The main advantage of trading using opposite CMC Investment and CEO Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Investment position performs unexpectedly, CEO Group 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 CEO Group will offset losses from the drop in CEO Group's long position.| CMC Investment vs. FIT INVEST JSC | CMC Investment vs. Damsan JSC | CMC Investment vs. An Phat Plastic | CMC Investment vs. APG Securities Joint |
| CEO Group vs. FIT INVEST JSC | CEO Group vs. Damsan JSC | CEO Group vs. An Phat Plastic | CEO Group vs. APG Securities Joint |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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