Correlation Between CBO Territoria and Crosswood

Can any of the company-specific risk be diversified away by investing in both CBO Territoria and Crosswood 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 Crosswood 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 Crosswood, you can compare the effects of market volatilities on CBO Territoria and Crosswood 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 Crosswood. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBO Territoria and Crosswood.

Diversification Opportunities for CBO Territoria and Crosswood

0.55

Correlation Coefficient

CBO Territoria  Crosswood

Very weak diversification

The 3 months correlation between CBO and Crosswood is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CBO Territoria SA and Crosswood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crosswood 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 Crosswood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crosswood has no effect on the direction of CBO Territoria i.e., CBO Territoria and Crosswood go up and down completely randomly.

Pair Corralation between CBO Territoria and Crosswood

Assuming the 90 days trading horizon CBO Territoria is expected to generate 4.22 times less return on investment than Crosswood. But when comparing it to its historical volatility, CBO Territoria SA is 2.73 times less risky than Crosswood. It trades about 0.07 of its potential returns per unit of risk. Crosswood is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  995.00  in Crosswood on December 21, 2024 and sell it today you would earn a total of  95.00  from holding Crosswood or generate 9.55% return on investment over 90 days.

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

CBO Territoria SA  vs.  Crosswood

CBO Territoria SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CBO Territoria SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CBO Territoria is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Crosswood

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crosswood are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Crosswood may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CBO Territoria and Crosswood

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

The idea behind CBO Territoria SA and Crosswood 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.