Correlation Between Top Material and Camus Engineering

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

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

Diversification Opportunities for Top Material and Camus Engineering

0.3

Correlation Coefficient

Top Material  Camus Engineering

Weak diversification

The 3 months correlation between Top and Camus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and Camus Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camus Engineering and Top Material 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 Top Material Co are associated (or correlated) with Camus Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camus Engineering has no effect on the direction of Top Material i.e., Top Material and Camus Engineering go up and down completely randomly.

Pair Corralation between Top Material and Camus Engineering

Assuming the 90 days trading horizon Top Material is expected to generate 3.58 times less return on investment than Camus Engineering. But when comparing it to its historical volatility, Top Material Co is 1.65 times less risky than Camus Engineering. It trades about 0.1 of its potential returns per unit of risk. Camus Engineering Construction is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  135,000  in Camus Engineering Construction on October 12, 2024 and sell it today you would earn a total of  36,300  from holding Camus Engineering Construction or generate 26.89% return on investment over 90 days.

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

Top Material Co  vs.  Camus Engineering Construction

Top Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Top Material Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Camus Engineering

Risk-Adjusted Performance

8 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Camus Engineering Construction are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Camus Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Top Material and Camus Engineering

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

The idea behind Top Material Co and Camus Engineering Construction 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..