Correlation Between COPLAND ROAD and THRACE PLASTICS

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

By analyzing existing cross correlation between COPLAND ROAD CAPITAL and THRACE PLASTICS, you can compare the effects of market volatilities on COPLAND ROAD and THRACE PLASTICS 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 COPLAND ROAD with a short position of THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of COPLAND ROAD and THRACE PLASTICS.

Diversification Opportunities for COPLAND ROAD and THRACE PLASTICS

0.41

Correlation Coefficient

COPLAND ROAD  THRACE PLASTICS

Very weak diversification

The 3 months correlation between COPLAND and THRACE is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding COPLAND ROAD CAPITAL and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS and COPLAND ROAD 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 COPLAND ROAD CAPITAL are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of COPLAND ROAD i.e., COPLAND ROAD and THRACE PLASTICS go up and down completely randomly.

Pair Corralation between COPLAND ROAD and THRACE PLASTICS

Assuming the 90 days horizon COPLAND ROAD CAPITAL is expected to generate 2.42 times more return on investment than THRACE PLASTICS. However, COPLAND ROAD is 2.42 times more volatile than THRACE PLASTICS. It trades about 0.22 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.01 per unit of risk. If you would invest  3,532  in COPLAND ROAD CAPITAL on December 4, 2024 and sell it today you would earn a total of  1,788  from holding COPLAND ROAD CAPITAL or generate 50.62% return on investment over 90 days.

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

COPLAND ROAD CAPITAL  vs.  THRACE PLASTICS

COPLAND ROAD CAPITAL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COPLAND ROAD CAPITAL are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COPLAND ROAD reported solid returns over the last few months and may actually be approaching a breakup point.

THRACE PLASTICS

Risk-Adjusted Performance

Very Weak

Over the last 90 days THRACE PLASTICS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THRACE PLASTICS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with COPLAND ROAD and THRACE PLASTICS

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

The idea behind COPLAND ROAD CAPITAL and THRACE PLASTICS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.