Can any of the company-specific risk be diversified away by investing in both Chibougamau Independent and Perimeter Medical 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 Chibougamau Independent and Perimeter Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chibougamau Independent Mines and Perimeter Medical Imaging, you can compare the effects of market volatilities on Chibougamau Independent and Perimeter Medical 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 Chibougamau Independent with a short position of Perimeter Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chibougamau Independent and Perimeter Medical.
Diversification Opportunities for Chibougamau Independent and Perimeter Medical
The 3 months correlation between Chibougamau and Perimeter is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Chibougamau Independent Mines and Perimeter Medical Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter Medical Imaging and Chibougamau Independent 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 Chibougamau Independent Mines are associated (or correlated) with Perimeter Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Medical Imaging has no effect on the direction of Chibougamau Independent i.e., Chibougamau Independent and Perimeter Medical go up and down completely randomly.
Pair Corralation between Chibougamau Independent and Perimeter Medical
Assuming the 90 days horizon Chibougamau Independent Mines is expected to generate 0.89 times more return on investment than Perimeter Medical. However, Chibougamau Independent Mines is 1.12 times less risky than Perimeter Medical. It trades about 0.19 of its potential returns per unit of risk. Perimeter Medical Imaging is currently generating about 0.09 per unit of risk. If you would invest 12.00 in Chibougamau Independent Mines on March 6, 2024 and sell it today you would earn a total of 2.00 from holding Chibougamau Independent Mines or generate 16.67% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Chibougamau Independent Mines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chibougamau Independent showed solid returns over the last few months and may actually be approaching a breakup point.
Over the last 90 days Perimeter Medical Imaging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in July 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.