Correlation Between Carlson Investments and Skyline Investment

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

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

Diversification Opportunities for Carlson Investments and Skyline Investment

-0.04

Correlation Coefficient

Carlson Investments  Skyline Investment

Good diversification

The 3 months correlation between Carlson and Skyline is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Carlson Investments SA and Skyline Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyline Investment and Carlson 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 Carlson Investments SA are associated (or correlated) with Skyline Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyline Investment has no effect on the direction of Carlson Investments i.e., Carlson Investments and Skyline Investment go up and down completely randomly.

Pair Corralation between Carlson Investments and Skyline Investment

Assuming the 90 days trading horizon Carlson Investments SA is expected to generate 2.89 times more return on investment than Skyline Investment. However, Carlson Investments is 2.89 times more volatile than Skyline Investment SA. It trades about 0.06 of its potential returns per unit of risk. Skyline Investment SA is currently generating about 0.08 per unit of risk. If you would invest  359.00  in Carlson Investments SA on December 29, 2024 and sell it today you would earn a total of  55.00  from holding Carlson Investments SA or generate 15.32% return on investment over 90 days.

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

Carlson Investments SA  vs.  Skyline Investment SA

Carlson Investments

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlson Investments SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Carlson Investments reported solid returns over the last few months and may actually be approaching a breakup point.

Skyline Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skyline Investment SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Skyline Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Carlson Investments and Skyline Investment

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

The idea behind Carlson Investments SA and Skyline Investment SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.