Correlation Between Canaf Investments and Pentagon I

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

By analyzing existing cross correlation between Canaf Investments and Pentagon I Capital, you can compare the effects of market volatilities on Canaf Investments and Pentagon I 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 Canaf Investments with a short position of Pentagon I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaf Investments and Pentagon I.

Diversification Opportunities for Canaf Investments and Pentagon I

0.16

Correlation Coefficient

Canaf Investments  Pentagon I

Average diversification

The 3 months correlation between Canaf and Pentagon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Canaf Investments and Pentagon I Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentagon I Capital and Canaf Investments 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 Canaf Investments are associated (or correlated) with Pentagon I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentagon I Capital has no effect on the direction of Canaf Investments i.e., Canaf Investments and Pentagon I go up and down completely randomly.

Pair Corralation between Canaf Investments and Pentagon I

Assuming the 90 days horizon Canaf Investments is expected to generate 0.45 times more return on investment than Pentagon I. However, Canaf Investments is 2.22 times less risky than Pentagon I. It trades about 0.18 of its potential returns per unit of risk. Pentagon I Capital is currently generating about -0.08 per unit of risk. If you would invest  30.00  in Canaf Investments on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Canaf Investments or generate 10.0% return on investment over 90 days.

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

Canaf Investments  vs.  Pentagon I Capital

Canaf Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canaf Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Canaf Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Canaf Investments and Pentagon I

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

The idea behind Canaf Investments and Pentagon I Capital 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.