Correlation Between Canadian General and Chrysalis Investments

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

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

Diversification Opportunities for Canadian General and Chrysalis Investments

0.36

Correlation Coefficient

Canadian General  Chrysalis Investments

Weak diversification

The 3 months correlation between Canadian and Chrysalis is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Chrysalis Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chrysalis Investments and Canadian General 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 Canadian General Investments are associated (or correlated) with Chrysalis Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chrysalis Investments has no effect on the direction of Canadian General i.e., Canadian General and Chrysalis Investments go up and down completely randomly.

Pair Corralation between Canadian General and Chrysalis Investments

Assuming the 90 days trading horizon Canadian General Investments is expected to under-perform the Chrysalis Investments. In addition to that, Canadian General is 1.17 times more volatile than Chrysalis Investments. It trades about -0.1 of its total potential returns per unit of risk. Chrysalis Investments is currently generating about -0.11 per unit of volatility. If you would invest  10,780  in Chrysalis Investments on December 24, 2024 and sell it today you would lose (1,180) from holding Chrysalis Investments or give up 10.95% of portfolio value over 90 days.

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

Canadian General Investments  vs.  Chrysalis Investments

Canadian General Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian General Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Chrysalis Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chrysalis Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Canadian General and Chrysalis Investments

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

The idea behind Canadian General Investments and Chrysalis Investments 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.