Correlation Between Compagnie and Sidetrade

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

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

Diversification Opportunities for Compagnie and Sidetrade

-0.33

Correlation Coefficient

Compagnie  Sidetrade

Very good diversification

The 3 months correlation between Compagnie and Sidetrade is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Cambodge and Sidetrade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidetrade and Compagnie 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 Compagnie du Cambodge are associated (or correlated) with Sidetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidetrade has no effect on the direction of Compagnie i.e., Compagnie and Sidetrade go up and down completely randomly.

Pair Corralation between Compagnie and Sidetrade

Assuming the 90 days trading horizon Compagnie du Cambodge is expected to generate 153.29 times more return on investment than Sidetrade. However, Compagnie is 153.29 times more volatile than Sidetrade. It trades about 0.33 of its potential returns per unit of risk. Sidetrade is currently generating about 0.07 per unit of risk. If you would invest  765,000  in Compagnie du Cambodge on September 3, 2024 and sell it today you would lose (755,500) from holding Compagnie du Cambodge or give up 98.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Compagnie du Cambodge  vs.  Sidetrade

Compagnie du Cambodge

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Sidetrade

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sidetrade are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sidetrade may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Compagnie and Sidetrade

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

The idea behind Compagnie du Cambodge and Sidetrade 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..