Correlation Between VARIOUS EATERIES and CyberAgent

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

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

Diversification Opportunities for VARIOUS EATERIES and CyberAgent

-0.6

Correlation Coefficient

VARIOUS EATERIES  CyberAgent

Excellent diversification

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

Pair Corralation between VARIOUS EATERIES and CyberAgent

Assuming the 90 days horizon VARIOUS EATERIES LS is expected to under-perform the CyberAgent. But the stock apears to be less risky and, when comparing its historical volatility, VARIOUS EATERIES LS is 1.49 times less risky than CyberAgent. The stock trades about -0.13 of its potential returns per unit of risk. The CyberAgent is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  620.00  in CyberAgent on October 6, 2024 and sell it today you would earn a total of  50.00  from holding CyberAgent or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

VARIOUS EATERIES LS  vs.  CyberAgent

VARIOUS EATERIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VARIOUS EATERIES LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CyberAgent

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CyberAgent are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CyberAgent may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VARIOUS EATERIES and CyberAgent

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

The idea behind VARIOUS EATERIES LS and CyberAgent 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.