Correlation Between CA Modas and Dell Technologies

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

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

Diversification Opportunities for CA Modas and Dell Technologies

0.3

Correlation Coefficient

CA Modas  Dell Technologies

Weak diversification

The 3 months correlation between CEAB3 and Dell is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CA Modas SA and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies and CA Modas 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 CA Modas SA are associated (or correlated) with Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of CA Modas i.e., CA Modas and Dell Technologies go up and down completely randomly.

Pair Corralation between CA Modas and Dell Technologies

Assuming the 90 days trading horizon CA Modas SA is expected to generate 1.04 times more return on investment than Dell Technologies. However, CA Modas is 1.04 times more volatile than Dell Technologies. It trades about -0.02 of its potential returns per unit of risk. Dell Technologies is currently generating about -0.06 per unit of risk. If you would invest  996.00  in CA Modas SA on November 28, 2024 and sell it today you would lose (79.00) from holding CA Modas SA or give up 7.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

CA Modas SA  vs.  Dell Technologies

CA Modas SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days CA Modas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CA Modas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dell Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CA Modas and Dell Technologies

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

The idea behind CA Modas SA and Dell Technologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.