Correlation Between Ceres Power and CAP LEASE
Can any of the company-specific risk be diversified away by investing in both Ceres Power and CAP LEASE 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 Power and CAP LEASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceres Power Holdings and CAP LEASE AVIATION, you can compare the effects of market volatilities on Ceres Power and CAP LEASE 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 Power with a short position of CAP LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceres Power and CAP LEASE.
Diversification Opportunities for Ceres Power and CAP LEASE
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ceres and CAP is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ceres Power Holdings and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION and Ceres Power 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 Power Holdings are associated (or correlated) with CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Ceres Power i.e., Ceres Power and CAP LEASE go up and down completely randomly.
Pair Corralation between Ceres Power and CAP LEASE
Assuming the 90 days trading horizon Ceres Power Holdings is expected to generate 1.47 times more return on investment than CAP LEASE. However, Ceres Power is 1.47 times more volatile than CAP LEASE AVIATION. It trades about -0.01 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.03 per unit of risk. If you would invest 33,870 in Ceres Power Holdings on September 14, 2024 and sell it today you would lose (16,520) from holding Ceres Power Holdings or give up 48.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.57% |
| Values | Daily Returns |
Ceres Power Holdings vs. CAP LEASE AVIATION
Performance |
| Timeline |
| Ceres Power Holdings |
| CAP LEASE AVIATION |
Ceres Power and CAP LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceres Power and CAP LEASE
The main advantage of trading using opposite Ceres Power and CAP LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceres Power position performs unexpectedly, CAP LEASE 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 CAP LEASE will offset losses from the drop in CAP LEASE's long position.| Ceres Power vs. CAP LEASE AVIATION | Ceres Power vs. Fortune Brands Home | Ceres Power vs. Cairo Communication SpA | Ceres Power vs. Applied Materials |
| CAP LEASE vs. Givaudan SA | CAP LEASE vs. Antofagasta PLC | CAP LEASE vs. Ferrexpo PLC | CAP LEASE vs. Atalaya Mining |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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