Correlation Between SideChannel and CiT

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

By analyzing existing cross correlation between SideChannel and CiT Inc, you can compare the effects of market volatilities on SideChannel and CiT 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 SideChannel with a short position of CiT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SideChannel and CiT.

Diversification Opportunities for SideChannel and CiT

0.0

Correlation Coefficient

SideChannel  CiT

Pay attention - limited upside

The 3 months correlation between SideChannel and CiT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SideChannel and CiT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CiT Inc and SideChannel 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 SideChannel are associated (or correlated) with CiT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CiT Inc has no effect on the direction of SideChannel i.e., SideChannel and CiT go up and down completely randomly.

Pair Corralation between SideChannel and CiT

Given the investment horizon of 90 days SideChannel is expected to generate 4.72 times more return on investment than CiT. However, SideChannel is 4.72 times more volatile than CiT Inc. It trades about 0.09 of its potential returns per unit of risk. CiT Inc is currently generating about 0.02 per unit of risk. If you would invest  3.20  in SideChannel on September 15, 2024 and sell it today you would earn a total of  0.79  from holding SideChannel or generate 24.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

SideChannel  vs.  CiT Inc

SideChannel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SideChannel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, SideChannel demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CiT Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CiT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SideChannel and CiT

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

The idea behind SideChannel and CiT Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.