Correlation Between CBO Territoria and Compagnie Des

Can any of the company-specific risk be diversified away by investing in both CBO Territoria and Compagnie Des 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 CBO Territoria and Compagnie Des into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CBO Territoria SA and Compagnie des Tramways, you can compare the effects of market volatilities on CBO Territoria and Compagnie Des 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 CBO Territoria with a short position of Compagnie Des. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBO Territoria and Compagnie Des.

Diversification Opportunities for CBO Territoria and Compagnie Des

0.74

Correlation Coefficient

CBO Territoria  Compagnie Des

Poor diversification

The 3 months correlation between CBO and Compagnie is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CBO Territoria SA and Compagnie des Tramways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie des Tramways and CBO Territoria 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 CBO Territoria SA are associated (or correlated) with Compagnie Des. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie des Tramways has no effect on the direction of CBO Territoria i.e., CBO Territoria and Compagnie Des go up and down completely randomly.

Pair Corralation between CBO Territoria and Compagnie Des

Assuming the 90 days trading horizon CBO Territoria SA is expected to generate 0.57 times more return on investment than Compagnie Des. However, CBO Territoria SA is 1.76 times less risky than Compagnie Des. It trades about 0.06 of its potential returns per unit of risk. Compagnie des Tramways is currently generating about 0.01 per unit of risk. If you would invest  341.00  in CBO Territoria SA on March 28, 2024 and sell it today you would earn a total of  11.00  from holding CBO Territoria SA or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CBO Territoria SA  vs.  Compagnie des Tramways

CBO Territoria SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CBO Territoria SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CBO Territoria is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compagnie des Tramways

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie des Tramways are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie Des may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with CBO Territoria and Compagnie Des

The main advantage of trading using opposite CBO Territoria and Compagnie Des positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBO Territoria position performs unexpectedly, Compagnie Des 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 Compagnie Des will offset losses from the drop in Compagnie Des' long position.

The idea behind CBO Territoria SA and Compagnie des Tramways 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.