Correlation Between Sidetrade and Compagnie

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

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

Diversification Opportunities for Sidetrade and Compagnie

0.23

Correlation Coefficient

Sidetrade  Compagnie

Modest diversification

The 3 months correlation between Sidetrade and Compagnie is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sidetrade and Compagnie du Cambodge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Cambodge and Sidetrade 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 Sidetrade are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Cambodge has no effect on the direction of Sidetrade i.e., Sidetrade and Compagnie go up and down completely randomly.

Pair Corralation between Sidetrade and Compagnie

Assuming the 90 days trading horizon Sidetrade is expected to generate 1.92 times less return on investment than Compagnie. But when comparing it to its historical volatility, Sidetrade is 1.25 times less risky than Compagnie. It trades about 0.09 of its potential returns per unit of risk. Compagnie du Cambodge is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  9,800  in Compagnie du Cambodge on October 26, 2024 and sell it today you would earn a total of  1,700  from holding Compagnie du Cambodge or generate 17.35% return on investment over 90 days.

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

Sidetrade  vs.  Compagnie du Cambodge

Sidetrade

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sidetrade are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sidetrade may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Compagnie du Cambodge

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sidetrade and Compagnie

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

The idea behind Sidetrade and Compagnie du Cambodge 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.