Correlation Between CAVA Group, and Intchains Group

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

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

Diversification Opportunities for CAVA Group, and Intchains Group

-0.38

Correlation Coefficient

CAVA Group,  Intchains Group

Very good diversification

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

Pair Corralation between CAVA Group, and Intchains Group

Given the investment horizon of 90 days CAVA Group, is expected to generate 1.9 times less return on investment than Intchains Group. But when comparing it to its historical volatility, CAVA Group, is 4.05 times less risky than Intchains Group. It trades about 0.06 of its potential returns per unit of risk. Intchains Group Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  780.00  in Intchains Group Limited on October 4, 2024 and sell it today you would lose (354.00) from holding Intchains Group Limited or give up 45.38% of portfolio value over 90 days.

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

CAVA Group,  vs.  Intchains Group Limited

CAVA Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAVA Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Intchains Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intchains Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Intchains Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAVA Group, and Intchains Group

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

The idea behind CAVA Group, and Intchains Group Limited 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.