Correlation Between Cuckoo Electronics and COWAY

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

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

Diversification Opportunities for Cuckoo Electronics and COWAY

-0.05

Correlation Coefficient

Cuckoo Electronics  COWAY

Good diversification

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

Pair Corralation between Cuckoo Electronics and COWAY

Assuming the 90 days trading horizon Cuckoo Electronics Co is expected to under-perform the COWAY. But the stock apears to be less risky and, when comparing its historical volatility, Cuckoo Electronics Co is 1.43 times less risky than COWAY. The stock trades about -0.08 of its potential returns per unit of risk. The COWAY Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,570,000  in COWAY Co on September 5, 2024 and sell it today you would earn a total of  370,000  from holding COWAY Co or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Cuckoo Electronics Co  vs.  COWAY Co

Cuckoo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuckoo Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

COWAY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COWAY Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COWAY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cuckoo Electronics and COWAY

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

The idea behind Cuckoo Electronics Co and COWAY Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.