Correlation Between Steel Connect and CMG Holdings
Can any of the company-specific risk be diversified away by investing in both Steel Connect and CMG Holdings 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 Steel Connect and CMG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Connect and CMG Holdings Group, you can compare the effects of market volatilities on Steel Connect and CMG Holdings 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 Steel Connect with a short position of CMG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Connect and CMG Holdings.
Diversification Opportunities for Steel Connect and CMG Holdings
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Steel and CMG is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Steel Connect and CMG Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Holdings Group and Steel Connect 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 Steel Connect are associated (or correlated) with CMG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Holdings Group has no effect on the direction of Steel Connect i.e., Steel Connect and CMG Holdings go up and down completely randomly.
Pair Corralation between Steel Connect and CMG Holdings
Given the investment horizon of 90 days Steel Connect is expected to under-perform the CMG Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Steel Connect is 3.25 times less risky than CMG Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The CMG Holdings Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.16 in CMG Holdings Group on August 31, 2024 and sell it today you would earn a total of 0.02 from holding CMG Holdings Group or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Connect vs. CMG Holdings Group
Performance |
| Timeline |
| Steel Connect |
| CMG Holdings Group |
Steel Connect and CMG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Connect and CMG Holdings
The main advantage of trading using opposite Steel Connect and CMG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Connect position performs unexpectedly, CMG Holdings 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 CMG Holdings will offset losses from the drop in CMG Holdings' long position.| Steel Connect vs. Baosheng Media Group | Steel Connect vs. Impact Fusion International | Steel Connect vs. Mirriad Advertising plc | Steel Connect vs. CyberAgent ADR |
| CMG Holdings vs. Tautachrome | CMG Holdings vs. VNUE Inc | CMG Holdings vs. South Beach Spirits | CMG Holdings vs. North Bay Resources |
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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