Correlation Between Ceres Global and Covalon Technologies
Can any of the company-specific risk be diversified away by investing in both Ceres Global and Covalon Technologies 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 Ceres Global and Covalon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceres Global Ag and Covalon Technologies, you can compare the effects of market volatilities on Ceres Global and Covalon Technologies 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 Ceres Global with a short position of Covalon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceres Global and Covalon Technologies.
Diversification Opportunities for Ceres Global and Covalon Technologies
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ceres and Covalon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ceres Global Ag and Covalon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covalon Technologies and Ceres Global 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 Ceres Global Ag are associated (or correlated) with Covalon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covalon Technologies has no effect on the direction of Ceres Global i.e., Ceres Global and Covalon Technologies go up and down completely randomly.
Pair Corralation between Ceres Global and Covalon Technologies
Assuming the 90 days trading horizon Ceres Global Ag is expected to under-perform the Covalon Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Ceres Global Ag is 1.84 times less risky than Covalon Technologies. The stock trades about -0.18 of its potential returns per unit of risk. The Covalon Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 335.00 in Covalon Technologies on August 31, 2024 and sell it today you would earn a total of 35.00 from holding Covalon Technologies or generate 10.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ceres Global Ag vs. Covalon Technologies
Performance |
| Timeline |
| Ceres Global Ag |
| Covalon Technologies |
Ceres Global and Covalon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceres Global and Covalon Technologies
The main advantage of trading using opposite Ceres Global and Covalon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceres Global position performs unexpectedly, Covalon Technologies 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 Covalon Technologies will offset losses from the drop in Covalon Technologies' long position.| Ceres Global vs. Maple Leaf Foods | Ceres Global vs. Saputo Inc | Ceres Global vs. Forstrong Global Income | Ceres Global vs. iShares Canadian HYBrid |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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