Correlation Between Camus Engineering and Microfriend

Can any of the company-specific risk be diversified away by investing in both Camus Engineering and Microfriend 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 Microfriend 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 Microfriend, you can compare the effects of market volatilities on Camus Engineering and Microfriend 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 Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camus Engineering and Microfriend.

Diversification Opportunities for Camus Engineering and Microfriend

0.27

Correlation Coefficient

Camus Engineering  Microfriend

Modest diversification

The 3 months correlation between Camus and Microfriend is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Camus Engineering Construction and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend 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 Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Camus Engineering i.e., Camus Engineering and Microfriend go up and down completely randomly.

Pair Corralation between Camus Engineering and Microfriend

Assuming the 90 days trading horizon Camus Engineering Construction is expected to under-perform the Microfriend. In addition to that, Camus Engineering is 1.48 times more volatile than Microfriend. It trades about 0.0 of its total potential returns per unit of risk. Microfriend is currently generating about 0.02 per unit of volatility. If you would invest  274,500  in Microfriend on December 26, 2024 and sell it today you would earn a total of  2,500  from holding Microfriend or generate 0.91% return on investment over 90 days.

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

Camus Engineering Construction  vs.  Microfriend

Camus Engineering

Risk-Adjusted Performance

Very Weak

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

Microfriend

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microfriend are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Microfriend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Camus Engineering and Microfriend

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

The idea behind Camus Engineering Construction and Microfriend 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.