Correlation Between CK Power and Matching Maximize

Can any of the company-specific risk be diversified away by investing in both CK Power and Matching Maximize 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 CK Power and Matching Maximize into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CK Power Public and Matching Maximize Solution, you can compare the effects of market volatilities on CK Power and Matching Maximize 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 CK Power with a short position of Matching Maximize. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Power and Matching Maximize.

Diversification Opportunities for CK Power and Matching Maximize

0.33

Correlation Coefficient

CK Power  Matching Maximize

Weak diversification

The 3 months correlation between CKP and Matching is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CK Power Public and Matching Maximize Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matching Maximize and CK Power 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 CK Power Public are associated (or correlated) with Matching Maximize. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matching Maximize has no effect on the direction of CK Power i.e., CK Power and Matching Maximize go up and down completely randomly.

Pair Corralation between CK Power and Matching Maximize

Assuming the 90 days trading horizon CK Power Public is expected to under-perform the Matching Maximize. But the stock apears to be less risky and, when comparing its historical volatility, CK Power Public is 1.95 times less risky than Matching Maximize. The stock trades about -0.1 of its potential returns per unit of risk. The Matching Maximize Solution is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  147.00  in Matching Maximize Solution on March 31, 2024 and sell it today you would lose (4.00) from holding Matching Maximize Solution or give up 2.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

CK Power Public  vs.  Matching Maximize Solution

CK Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CK Power Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CK Power is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Matching Maximize

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matching Maximize Solution has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Matching Maximize is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CK Power and Matching Maximize

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

The idea behind CK Power Public and Matching Maximize Solution 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.