Correlation Between Camrova Resources and Advantage Solutions

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

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

Diversification Opportunities for Camrova Resources and Advantage Solutions

0.62

Correlation Coefficient

Camrova Resources  Advantage Solutions

Poor diversification

The 3 months correlation between Camrova and Advantage is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Camrova Resources and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and Camrova Resources 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 Camrova Resources are associated (or correlated) with Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of Camrova Resources i.e., Camrova Resources and Advantage Solutions go up and down completely randomly.

Pair Corralation between Camrova Resources and Advantage Solutions

Assuming the 90 days horizon Camrova Resources is expected to under-perform the Advantage Solutions. In addition to that, Camrova Resources is 1.0 times more volatile than Advantage Solutions. It trades about -0.13 of its total potential returns per unit of risk. Advantage Solutions is currently generating about 0.0 per unit of volatility. If you would invest  2.85  in Advantage Solutions on October 20, 2024 and sell it today you would lose (1.14) from holding Advantage Solutions or give up 40.0% of portfolio value over 90 days.

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

Camrova Resources  vs.  Advantage Solutions

Camrova Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camrova Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Advantage Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advantage Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Advantage Solutions is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Camrova Resources and Advantage Solutions

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

The idea behind Camrova Resources and Advantage Solutions 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.