Correlation Between CBO Territoria and Bassac

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

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

Diversification Opportunities for CBO Territoria and Bassac

0.39

Correlation Coefficient

CBO Territoria  Bassac

Weak diversification

The 3 months correlation between CBO and Bassac is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CBO Territoria SA and Bassac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassac and CBO Territoria 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 CBO Territoria SA are associated (or correlated) with Bassac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassac has no effect on the direction of CBO Territoria i.e., CBO Territoria and Bassac go up and down completely randomly.

Pair Corralation between CBO Territoria and Bassac

Assuming the 90 days trading horizon CBO Territoria SA is expected to under-perform the Bassac. But the stock apears to be less risky and, when comparing its historical volatility, CBO Territoria SA is 4.6 times less risky than Bassac. The stock trades about -0.08 of its potential returns per unit of risk. The Bassac is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,270  in Bassac on September 17, 2024 and sell it today you would earn a total of  50.00  from holding Bassac or generate 1.17% return on investment over 90 days.

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

CBO Territoria SA  vs.  Bassac

CBO Territoria SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBO Territoria SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CBO Territoria is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bassac

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bassac are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bassac is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CBO Territoria and Bassac

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

The idea behind CBO Territoria SA and Bassac 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 Commodity Directory module to find actively traded commodities issued by global exchanges.