Correlation Between CMS Energy and CK Infrastructure
Can any of the company-specific risk be diversified away by investing in both CMS Energy and CK Infrastructure 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 CMS Energy and CK Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMS Energy and CK Infrastructure Holdings, you can compare the effects of market volatilities on CMS Energy and CK Infrastructure 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 CMS Energy with a short position of CK Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMS Energy and CK Infrastructure.
Diversification Opportunities for CMS Energy and CK Infrastructure
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CMS and CHH is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CMS Energy and CK Infrastructure Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Infrastructure and CMS Energy 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 CMS Energy are associated (or correlated) with CK Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Infrastructure has no effect on the direction of CMS Energy i.e., CMS Energy and CK Infrastructure go up and down completely randomly.
Pair Corralation between CMS Energy and CK Infrastructure
Assuming the 90 days horizon CMS Energy is expected to generate 0.47 times more return on investment than CK Infrastructure. However, CMS Energy is 2.11 times less risky than CK Infrastructure. It trades about 0.04 of its potential returns per unit of risk. CK Infrastructure Holdings is currently generating about 0.02 per unit of risk. If you would invest 6,200 in CMS Energy on September 12, 2024 and sell it today you would earn a total of 200.00 from holding CMS Energy or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMS Energy vs. CK Infrastructure Holdings
Performance |
| Timeline |
| CMS Energy |
| CK Infrastructure |
CMS Energy and CK Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMS Energy and CK Infrastructure
The main advantage of trading using opposite CMS Energy and CK Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMS Energy position performs unexpectedly, CK Infrastructure 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 CK Infrastructure will offset losses from the drop in CK Infrastructure's long position.| CMS Energy vs. INTERCONT HOTELS | CMS Energy vs. Dalata Hotel Group | CMS Energy vs. VITEC SOFTWARE GROUP | CMS Energy vs. Constellation Software |
| CK Infrastructure vs. INDO RAMA SYNTHETIC | CK Infrastructure vs. STMICROELECTRONICS | CK Infrastructure vs. Eastman Chemical | CK Infrastructure vs. Arrow Electronics |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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