Correlation Between CMC Investment and Transimex Transportation
Can any of the company-specific risk be diversified away by investing in both CMC Investment and Transimex Transportation 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 Transimex Transportation 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 Transimex Transportation JSC, you can compare the effects of market volatilities on CMC Investment and Transimex Transportation 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 Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Investment and Transimex Transportation.
Diversification Opportunities for CMC Investment and Transimex Transportation
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CMC and Transimex is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CMC Investment JSC and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation 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 Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of CMC Investment i.e., CMC Investment and Transimex Transportation go up and down completely randomly.
Pair Corralation between CMC Investment and Transimex Transportation
Assuming the 90 days trading horizon CMC Investment JSC is expected to under-perform the Transimex Transportation. In addition to that, CMC Investment is 1.88 times more volatile than Transimex Transportation JSC. It trades about -0.23 of its total potential returns per unit of risk. Transimex Transportation JSC is currently generating about -0.13 per unit of volatility. If you would invest 1,790,000 in Transimex Transportation JSC on August 31, 2024 and sell it today you would lose (90,000) from holding Transimex Transportation JSC or give up 5.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.86% |
| Values | Daily Returns |
CMC Investment JSC vs. Transimex Transportation JSC
Performance |
| Timeline |
| CMC Investment JSC |
| Transimex Transportation |
CMC Investment and Transimex Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Investment and Transimex Transportation
The main advantage of trading using opposite CMC Investment and Transimex Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Investment position performs unexpectedly, Transimex Transportation 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 Transimex Transportation will offset losses from the drop in Transimex Transportation's long position.| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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