Correlation Between Cymbria and Uniteds
Can any of the company-specific risk be diversified away by investing in both Cymbria and Uniteds 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 Cymbria and Uniteds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cymbria and Uniteds Limited, you can compare the effects of market volatilities on Cymbria and Uniteds 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 Cymbria with a short position of Uniteds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cymbria and Uniteds.
Diversification Opportunities for Cymbria and Uniteds
Very poor diversification
The 3 months correlation between Cymbria and Uniteds is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cymbria and Uniteds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniteds Limited and Cymbria 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 Cymbria are associated (or correlated) with Uniteds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniteds Limited has no effect on the direction of Cymbria i.e., Cymbria and Uniteds go up and down completely randomly.
Pair Corralation between Cymbria and Uniteds
Assuming the 90 days trading horizon Cymbria is expected to generate 1.12 times less return on investment than Uniteds. But when comparing it to its historical volatility, Cymbria is 1.08 times less risky than Uniteds. It trades about 0.08 of its potential returns per unit of risk. Uniteds Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,030 in Uniteds Limited on August 31, 2024 and sell it today you would earn a total of 3,025 from holding Uniteds Limited or generate 30.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cymbria vs. Uniteds Limited
Performance |
| Timeline |
| Cymbria |
| Uniteds Limited |
Cymbria and Uniteds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cymbria and Uniteds
The main advantage of trading using opposite Cymbria and Uniteds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cymbria position performs unexpectedly, Uniteds 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 Uniteds will offset losses from the drop in Uniteds' long position.| Cymbria vs. Clairvest Group | Cymbria vs. Uniteds Limited | Cymbria vs. E L Financial Corp | Cymbria vs. Senvest Capital |
| Uniteds vs. Economic Investment Trust | Uniteds vs. Canadian General Investments | Uniteds vs. E L Financial Corp | Uniteds vs. Clairvest Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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