Correlation Between CN MODERN and Easy Software

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

By analyzing existing cross correlation between CN MODERN DAIRY and Easy Software AG, you can compare the effects of market volatilities on CN MODERN and Easy Software 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 CN MODERN with a short position of Easy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Easy Software.

Diversification Opportunities for CN MODERN and Easy Software

0.6

Correlation Coefficient

CN MODERN  Easy Software

Poor diversification

The 3 months correlation between 07M and Easy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of CN MODERN i.e., CN MODERN and Easy Software go up and down completely randomly.

Pair Corralation between CN MODERN and Easy Software

Assuming the 90 days trading horizon CN MODERN is expected to generate 9.79 times less return on investment than Easy Software. In addition to that, CN MODERN is 1.49 times more volatile than Easy Software AG. It trades about 0.01 of its total potential returns per unit of risk. Easy Software AG is currently generating about 0.2 per unit of volatility. If you would invest  1,460  in Easy Software AG on October 11, 2024 and sell it today you would earn a total of  330.00  from holding Easy Software AG or generate 22.6% return on investment over 90 days.

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

CN MODERN DAIRY  vs.  Easy Software AG

CN MODERN DAIRY

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN MODERN DAIRY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, CN MODERN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Easy Software AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Easy Software displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CN MODERN and Easy Software

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

The idea behind CN MODERN DAIRY and Easy Software AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.