Correlation Between CGN Power and SENECA FOODS-A

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

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

Diversification Opportunities for CGN Power and SENECA FOODS-A

-0.17

Correlation Coefficient

CGN Power  SENECA FOODS-A

Good diversification

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

Pair Corralation between CGN Power and SENECA FOODS-A

Assuming the 90 days trading horizon CGN Power Co is expected to under-perform the SENECA FOODS-A. In addition to that, CGN Power is 1.57 times more volatile than SENECA FOODS A. It trades about -0.06 of its total potential returns per unit of risk. SENECA FOODS A is currently generating about 0.07 per unit of volatility. If you would invest  7,300  in SENECA FOODS A on December 26, 2024 and sell it today you would earn a total of  500.00  from holding SENECA FOODS A or generate 6.85% return on investment over 90 days.

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

CGN Power Co  vs.  SENECA FOODS A

CGN Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days CGN Power Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SENECA FOODS A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, SENECA FOODS-A may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CGN Power and SENECA FOODS-A

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

The idea behind CGN Power Co and SENECA FOODS A 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..