Correlation Between ARDAGH METAL and CGN Power

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

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and CGN Power Co, you can compare the effects of market volatilities on ARDAGH METAL and CGN Power 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 ARDAGH METAL with a short position of CGN Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and CGN Power.

Diversification Opportunities for ARDAGH METAL and CGN Power

0.17

Correlation Coefficient

ARDAGH METAL  CGN Power

Average diversification

The 3 months correlation between ARDAGH and CGN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and CGN Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGN Power and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with CGN Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGN Power has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and CGN Power go up and down completely randomly.

Pair Corralation between ARDAGH METAL and CGN Power

Assuming the 90 days horizon ARDAGH METAL is expected to generate 54.15 times less return on investment than CGN Power. But when comparing it to its historical volatility, ARDAGH METAL PACDL 0001 is 3.17 times less risky than CGN Power. It trades about 0.0 of its potential returns per unit of risk. CGN Power Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.99  in CGN Power Co on October 4, 2024 and sell it today you would earn a total of  21.01  from holding CGN Power Co or generate 300.57% return on investment over 90 days.

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

ARDAGH METAL PACDL 0001  vs.  CGN Power Co

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 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.

CGN Power

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CGN Power Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CGN Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARDAGH METAL and CGN Power

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

The idea behind ARDAGH METAL PACDL 0001 and CGN Power 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.