Correlation Between CA Sales and Reinet Investments

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

By analyzing existing cross correlation between CA Sales Holdings and Reinet Investments SCA, you can compare the effects of market volatilities on CA Sales and Reinet Investments 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 CA Sales with a short position of Reinet Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and Reinet Investments.

Diversification Opportunities for CA Sales and Reinet Investments

-0.52

Correlation Coefficient

CA Sales  Reinet Investments

Excellent diversification

The 3 months correlation between CAA and Reinet is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and Reinet Investments SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinet Investments SCA and CA Sales 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 CA Sales Holdings are associated (or correlated) with Reinet Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinet Investments SCA has no effect on the direction of CA Sales i.e., CA Sales and Reinet Investments go up and down completely randomly.

Pair Corralation between CA Sales and Reinet Investments

Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 1.34 times more return on investment than Reinet Investments. However, CA Sales is 1.34 times more volatile than Reinet Investments SCA. It trades about 0.01 of its potential returns per unit of risk. Reinet Investments SCA is currently generating about -0.04 per unit of risk. If you would invest  159,500  in CA Sales Holdings on December 4, 2024 and sell it today you would lose (500.00) from holding CA Sales Holdings or give up 0.31% of portfolio value over 90 days.

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

CA Sales Holdings  vs.  Reinet Investments SCA

CA Sales Holdings

Risk-Adjusted Performance

Very Weak

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

Reinet Investments SCA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CA Sales and Reinet Investments

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

The idea behind CA Sales Holdings and Reinet Investments SCA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.