Correlation Between H2O Retailing and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and CDL INVESTMENT 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 H2O Retailing and CDL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and CDL INVESTMENT, you can compare the effects of market volatilities on H2O Retailing and CDL INVESTMENT 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 H2O Retailing with a short position of CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and CDL INVESTMENT.
Diversification Opportunities for H2O Retailing and CDL INVESTMENT
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between H2O and CDL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT and H2O Retailing 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 H2O Retailing are associated (or correlated) with CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of H2O Retailing i.e., H2O Retailing and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between H2O Retailing and CDL INVESTMENT
Assuming the 90 days horizon H2O Retailing is expected to generate 1.02 times more return on investment than CDL INVESTMENT. However, H2O Retailing is 1.02 times more volatile than CDL INVESTMENT. It trades about -0.01 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.13 per unit of risk. If you would invest 1,350 in H2O Retailing on October 12, 2024 and sell it today you would lose (10.00) from holding H2O Retailing or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. CDL INVESTMENT
Performance |
| Timeline |
| H2O Retailing |
| CDL INVESTMENT |
H2O Retailing and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and CDL INVESTMENT
The main advantage of trading using opposite H2O Retailing and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.| H2O Retailing vs. PEPKOR LTD | H2O Retailing vs. Superior Plus Corp | H2O Retailing vs. NMI Holdings | H2O Retailing vs. SIVERS SEMICONDUCTORS AB |
| CDL INVESTMENT vs. H2O Retailing | CDL INVESTMENT vs. SCOTT TECHNOLOGY | CDL INVESTMENT vs. Fast Retailing Co | CDL INVESTMENT vs. SALESFORCE INC CDR |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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