Correlation Between Camus Engineering and Choil Aluminum

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

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

Diversification Opportunities for Camus Engineering and Choil Aluminum

0.05

Correlation Coefficient

Camus Engineering  Choil Aluminum

Significant diversification

The 3 months correlation between Camus and Choil is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Camus Engineering Construction and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum and Camus Engineering 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 Camus Engineering Construction are associated (or correlated) with Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of Camus Engineering i.e., Camus Engineering and Choil Aluminum go up and down completely randomly.

Pair Corralation between Camus Engineering and Choil Aluminum

Assuming the 90 days trading horizon Camus Engineering is expected to generate 1.99 times less return on investment than Choil Aluminum. In addition to that, Camus Engineering is 1.97 times more volatile than Choil Aluminum. It trades about 0.02 of its total potential returns per unit of risk. Choil Aluminum is currently generating about 0.08 per unit of volatility. If you would invest  148,900  in Choil Aluminum on November 29, 2024 and sell it today you would earn a total of  15,600  from holding Choil Aluminum or generate 10.48% return on investment over 90 days.

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

Camus Engineering Construction  vs.  Choil Aluminum

Camus Engineering

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Camus Engineering Construction are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Camus Engineering may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Choil Aluminum

Risk-Adjusted Performance

Modest

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

Pair Trading with Camus Engineering and Choil Aluminum

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

The idea behind Camus Engineering Construction and Choil Aluminum 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.