Correlation Between Canadian General and Resaas Services

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

Diversification Opportunities for Canadian General and Resaas Services

-0.41

Correlation Coefficient

Canadian General  Resaas Services

Very good diversification

The 3 months correlation between Canadian and Resaas is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Resaas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resaas Services 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 Resaas Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resaas Services has no effect on the direction of Canadian General i.e., Canadian General and Resaas Services go up and down completely randomly.

Pair Corralation between Canadian General and Resaas Services

Assuming the 90 days trading horizon Canadian General is expected to generate 8.57 times less return on investment than Resaas Services. But when comparing it to its historical volatility, Canadian General Investments is 9.03 times less risky than Resaas Services. It trades about 0.12 of its potential returns per unit of risk. Resaas Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Resaas Services on October 27, 2024 and sell it today you would earn a total of  4.00  from holding Resaas Services or generate 15.38% return on investment over 90 days.

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

Canadian General Investments  vs.  Resaas Services

Canadian General Inv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Canadian General is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Resaas Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Resaas Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Resaas Services showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian General and Resaas Services

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

The idea behind Canadian General Investments and Resaas Services 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.