Correlation Between Cohen Dev and Equital

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Can any of the company-specific risk be diversified away by investing in both Cohen Dev and Equital 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 Cohen Dev and Equital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohen Dev and Equital, you can compare the effects of market volatilities on Cohen Dev and Equital 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 Cohen Dev with a short position of Equital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohen Dev and Equital.

Diversification Opportunities for Cohen Dev and Equital

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Cohen and Equital is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Dev and Equital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equital and Cohen Dev 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 Cohen Dev are associated (or correlated) with Equital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equital has no effect on the direction of Cohen Dev i.e., Cohen Dev and Equital go up and down completely randomly.

Pair Corralation between Cohen Dev and Equital

Assuming the 90 days trading horizon Cohen Dev is expected to generate 1.44 times less return on investment than Equital. But when comparing it to its historical volatility, Cohen Dev is 1.15 times less risky than Equital. It trades about 0.05 of its potential returns per unit of risk. Equital is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  888,500  in Equital on December 29, 2023 and sell it today you would earn a total of  290,500  from holding Equital or generate 32.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.49%
ValuesDaily Returns

Cohen Dev  vs.  Equital

 Performance 
       Timeline  
Cohen Dev 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Cohen Dev has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cohen Dev is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Equital 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Equital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Equital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cohen Dev and Equital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cohen Dev and Equital

The main advantage of trading using opposite Cohen Dev and Equital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohen Dev position performs unexpectedly, Equital 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 Equital will offset losses from the drop in Equital's long position.
The idea behind Cohen Dev and Equital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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