Correlation Between CDN IMPERIAL and REGAL ASIAN

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

By analyzing existing cross correlation between CDN IMPERIAL BANK and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on CDN IMPERIAL and REGAL ASIAN 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 CDN IMPERIAL with a short position of REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and REGAL ASIAN.

Diversification Opportunities for CDN IMPERIAL and REGAL ASIAN

0.38

Correlation Coefficient

CDN IMPERIAL  REGAL ASIAN

Weak diversification

The 3 months correlation between CDN and REGAL is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS and CDN IMPERIAL 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 CDN IMPERIAL BANK are associated (or correlated) with REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and REGAL ASIAN go up and down completely randomly.

Pair Corralation between CDN IMPERIAL and REGAL ASIAN

Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 1.04 times more return on investment than REGAL ASIAN. However, CDN IMPERIAL is 1.04 times more volatile than REGAL ASIAN INVESTMENTS. It trades about -0.1 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about -0.11 per unit of risk. If you would invest  5,939  in CDN IMPERIAL BANK on December 28, 2024 and sell it today you would lose (563.00) from holding CDN IMPERIAL BANK or give up 9.48% of portfolio value over 90 days.

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

CDN IMPERIAL BANK  vs.  REGAL ASIAN INVESTMENTS

CDN IMPERIAL BANK

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDN IMPERIAL BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

Very Weak

Over the last 90 days REGAL ASIAN INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CDN IMPERIAL and REGAL ASIAN

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

The idea behind CDN IMPERIAL BANK and REGAL ASIAN INVESTMENTS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.