Correlation Between Cass Information and COMBA TELECOM

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

By analyzing existing cross correlation between Cass Information Systems and COMBA TELECOM SYST, you can compare the effects of market volatilities on Cass Information and COMBA TELECOM 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 Cass Information with a short position of COMBA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and COMBA TELECOM.

Diversification Opportunities for Cass Information and COMBA TELECOM

-0.03

Correlation Coefficient

Cass Information  COMBA TELECOM

Good diversification

The 3 months correlation between Cass and COMBA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST and Cass Information 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 Cass Information Systems are associated (or correlated) with COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of Cass Information i.e., Cass Information and COMBA TELECOM go up and down completely randomly.

Pair Corralation between Cass Information and COMBA TELECOM

Assuming the 90 days horizon Cass Information Systems is expected to under-perform the COMBA TELECOM. But the stock apears to be less risky and, when comparing its historical volatility, Cass Information Systems is 2.57 times less risky than COMBA TELECOM. The stock trades about -0.01 of its potential returns per unit of risk. The COMBA TELECOM SYST is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  13.00  in COMBA TELECOM SYST on December 21, 2024 and sell it today you would earn a total of  10.00  from holding COMBA TELECOM SYST or generate 76.92% return on investment over 90 days.

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

Cass Information Systems  vs.  COMBA TELECOM SYST

Cass Information Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cass Information Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cass Information is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

COMBA TELECOM SYST

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, COMBA TELECOM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Information and COMBA TELECOM

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

The idea behind Cass Information Systems and COMBA TELECOM SYST 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.